From briefing.com
MICRON TECHNOLOGY INC. (MU) 42 +1 1/4. Stock of DRAM chip maker concern is trading higher this afternoon, ahead of its fiscal 3rd qtr earnings results later this evening. According to the First Call mean estimate, the company is expected to have earned $0.39 a share in the 3rd qtr, a sequential increase from 2nd qtr net of $0.18 a share and year-ago earnings of $0.27 a share. The troubles that have hit the semiconductor sector are well documented and are responsible for the wide swing in price that this stock has experienced in the past couple of years. Shares of issue traded as high as $94 3/4 in 1995 when demand DRAM chips outstripped supply. But, as might be expected when market conditions get out-of-whack, a significant increase in supply reated a glut of chips in the global market which drove DRAM prices ower. In fact, in 1996, the oversupply of chips caused DRAM prices to fall by 80%. While all is not rosy again, conditions are improving and inventory levels are starting to return to levels that will allow the company to start growing margins and profits again. Nonetheless, much uncertainty remains over the near-term outlook for DRAM prices. Just last week, Lehman Brothers lowered its fiscal 4th qtr EPS estimate for Micron to $0.44 a share from $0.55 a share on concerns over a build-up in inventory, soft DRAM prices, and the overall order and supply in the chip industry. Yet, there seems to be a light at the end of the tunnel as analysts are starting to turn more constructive towards the sector longer-term. Of great importance along with the earning results tonight will be how Micron perceives market conditions to be going forward and whether chip supply has been restored to a more normal order. Lack of positive comments in this area could again send the stock whirling backwards. |
