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Thursday January 7 4:39 PM ET
Micron Tech Up On Positive Industry Outlook
By Daniel Bases
NEW YORK (Reuters) - Micron Technology Inc. (NYSE:MU - news) shares surged Thursday, spurred higher in heavy
trading by positive analyst comments about the outlook for the computer memory chip industry.
Micron shares were up $4.75 at $64.75 and were among the most actively traded issues on the New York Stock
Exchange.
''We made some positive comments in our conference call this morning, that by the end of fourth quarter, start of first
quarter 1999 we see the beginning of recovery in the semiconductor industry -- and it will be the first year of a multiyear
recovery,'' said Charlie Glavin Sr., semiconductor analyst at CS First Boston in San Francisco.
''Micron stands to gain the most in the DRAM (Dynamic Random Access Memory chips) sector because they are a
leader in design and process,'' Glavin said.
Traders said they see money moving into the sector, which has recently suffered from doubts about chip prices and
analysts' reluctance to rely on memory-chip companies in their model stock portfolios.
''The improvement in memory chip pricing now looks more sustainable,'' said one technology trader at a major brokerage
who requested anonymity. ''The outlook improved.''
According to Glavin, supply and demand in the memory-chip industry are coming back into balance.
''Bottom line, capital cutbacks at the end of 1997 through 1999 will cut down on supply. We've troughed,'' he said. ''The
historically weak first quarter won't be weak, and we see visibility improving for the industry looking forward.''
While the industry improves along with a healthy U.S. economy, he is not overly concerned that a downturn will devastate
the industry.
''Supply will come down in either case, and if demand comes down too, then there will just be a delay in the equilibrium,''
but it won't destroy it, he said.
SoundView Financial Group, an equity research firm focused on technology stocks, said Thursday in a report obtained by
Reuters that, according to a ''very reliable source,'' a major Asian producer of DRAMs had told distributors it was not
accepting additional orders for 64-megabyte chips, indicating difficulties in meeting demand,
SoundView confirmed the contents of the report.
''The implications behind this suggest that this supplier is having difficulty in satisfying demand from large OEMs (original
equipment manufacturers) and is therefore performing triage on its customer base, choosing to cut back on shipments to
distributors,'' the report said.
''If current pricing levels for 64-megabyte DRAMs, in the low $9 range, remain stable,'' Micron could do better than
break even for the February quarter, the report said. |
