Tad's comments on his downgrade:
Micron Technology hit by downgrade
By Cecily Fraser, CBS MarketWatch
Last Update: 1:55 PM ET Jun 17, 1999 Movers & Shakers
Earnings HeadlinesBOISE, Idaho (CBS.MW) -- Shares of Micron Technology fell Thursday after Needham & Co. cut its rating on the chipmaker to "avoid" from "hold," saying the current stock price is unwarranted.
Updated:
6/17/99 2:29:20 PM ETShares of the Boise, Idaho-based company (MU: news, msgs), which makes computer memory chips, fell 1 3/8 to 45 1/16 in recent trading.
Analyst Tad La Fountain said investors have displayed "unwarranted enthusiasm" for Micron.
"We believe the semiconductor industry is in the beginning stages of a multiple-year cyclical advance, and that the DRAM segment eventually will be a typically strong participant in the upswing," said La Fountain.
However, he said Micron's attempts to improve profitability have led to an oversupply of chips.
The analyst is projecting a 12-cent-per-share loss for the third quarter, assuming a $5.17 average selling price for a key 64-megabit memory chip. "This assumption is looking less and less likely," he said.
La Fountain said that his fiscal 1999 estimate calling for a loss of 24 cents a share should be viewed as "an increasingly optimistic figure." The figure is based on an assumption revenue will be $3.8 billion for the year.
The analyst also slashed his fiscal 2000 revenue estimates to $4.7 billion from $5.6 billion.
"The reduced revenue assumption leads to profit pressure in the first half and a year that barely finishes above breakeven," he said. |
