Charles Boucher of Bear Stearns has published a brief report on MU this morning:
Key Points:
*** Micron posted an upside surprise with EPS of $0.41 (excluding all
onetime benefits), beating our aggressive estimate of $0.37 and the
consensus estimate of $0.34. Gross margin was essentially flat sequentially
at 36.0%, excluding the one-time benefit. Operating margin was up 180 basis
points to 20.1%. Bit shipments grew over 50% sequentially as Micron brought
inventory levels down.
*** We expect 2H00 to be very strong for the DRAM market. Contract pricing
is currently in the mid-$6 range and spot pricing about $8. With very strong
demand from PC manufacturers expected and no new capacity available, we
expect DRAM supply to tighten dramatically in the next two quarters, further
improving pricing conditions, which should drive revenue and earnings for
the company.
*** We believe Micron to be extremely well positioned with a proven
0.18-micron process and plans to migrate approximately half of its
production to leading edge 0.15-micron process technology by the end of this
year, which should further improve die per wafer and lead to strong margin
expansion.
*** Micron is migrating production rapidly toward 128M DRAM, with over 60%
of its wafer outs currently 128M product. Pricing is slightly more favorable
for 128M devices, and costs are lower due to higher bit density per unit
silicon area, and lower test and assembly cost. We expect the mix of 128M
DRAM to continue to rise, favorably affecting margins and earnings.
*** We continue to view Micron stock as an attractive investment
opportunity. We believe that strong DRAM fundamentals and Micron's low cost
leadership should lead to very strong revenue and earnings growth. Our new
estimate for the August quarter is $0.80 with estimates for fiscal 2001 and
2002 of $5.45 and $5.80. We are raising our target price to $140, reiterate
our Buy rating, and would be aggressive buyers of shares of Micron.
Wendi K. Ninh
Assistant to Charles Boucher
Semiconductors
Bear Stearns & Co. Inc.
Citicorp Center
One Sansome Street
San Francisco, CA 94104
Tel: (415) 772-2998
Fax: (415) 772-2955
e-mail: wninh@bear.com |
