Micron Tech Shares Rise on Optimism for Higher Chip Prices
3/13/00 10:38:00 AM
Source: Bloomberg News
Boise, Idaho, March 13 (Bloomberg) -- Shares of Micron Technology Inc., the biggest U.S. maker of computer-memory chips, rose as much as 7.9 percent on optimism that prices for its products will rebound as demand begins to increase next month.
Micron rose 7 3/4 to 114 1/8 in early afternoon trading of 3.79 million shares. Earlier, it touched a record 114 3/4. The stock has gained 47 percent since Feb. 28 on enthusiasm for rising prices for dynamic random access memories, the main memory chips in personal computers.
The spot price today for a 64-megabyte computer-memory chip was about $5.22, down half a percent from Friday, though still up from a low of about $5 last month, Thomas Weisel Partners analyst Eric Ross said. Investors are buying Micron shares in hopes that rising demand for PCs will push up memory prices, Ross and other analysts said.
'There's an underlying hope for strength in prices,' said Thomas Smith, a Standard & Poor's Equity Group analyst who rates Micron an 'outperform.' 'Things have looked better in the past couple weeks. I suspect that trend is continuing.'
Ross said demand for DRAM chips will accelerate in April and May. He said DRAM sales will almost double this year from last year, when sales rose 105 percent on a strong back-to-school season. That's well above the average 80 percent growth in the last few years.
Chip prices remain about half of what they were in December, when they rose to about $10. Memory prices rise and fall most when the industry tries to either add more manufacturing capacity to meet surging demand or rein in production to cope with falling sales.
Following a two-year slump, prices started rising in the middle of last year as PC makers began shipping more memory in each machine and production slowed.
'The worst is behind us,' said Ross, who rates Boise, Idaho- based Micron a 'buy.'
Infineon
Micron may be getting a boost from enthusiasm for Germany's Infineon AG, Europe's third-largest chipmaker. Josephthal & Co. analyst Lawrence Borgman said Infineon operates largely in the DRAM market.
Siemens AG sold about 174 million shares, or about 29 percent, of Infineon to the public. Investors sought 33 times the number of shares offered, leaving it heavily oversubscribed, and shares more than doubled to 70.15 euros in Germany in the stock's first day of trading today.
'With the success of the Infineon offering, investors are saying if that's the way to treat Infineon, maybe we ought to take another look at Micron,' Borgman said. |
