Micron buys Hynix. This is one of the classic signs of a bottom in the cycle: the pain gets too severe, and a major player gets out of the commodity memory chip sector.
Here's what Fleck had to say about the subject tonight:
Turning to the Micron news, longtime readers know of my doubts that the deal would ever come to fruition. Previously, I opined that should it go through, one would be able to analyze it and say, "My God, this is a disaster," and the stock would go up anyway. That's pretty much what happened this morning, with Micron the only green in a sea of red as the dead-fish community was all over the news. Over the next couple of days, I'll have a chance to study the particulars and make further comments, but in the meantime, it looks to me like what the deal has done for Micron is to saddle it with more debt and more capacity, none of which the company will be able to shut in Korea. So, to me, this looks like a recipe for calamity. My hunch is that after the glow from this deal wears off, and after the investment banking fees are paid, this will be an outstanding short. |
