December 3, 2008, 10:58 am
Micron Extends Fall; Barclays Cuts Ests On DRAM Woes
Posted by Eric Savitz
Micron (MU) shares are down again today, after Barclays Capital analyst Tim Luke cut his estimates on the company in the face of continuing weakness in the DRAM market.
For the August 2009 fiscal year, Luke now sees MU reporting a loss of $1.36 a share, down from 95 cents previously. For FY 2010, he sees a loss of 7 cents, compared to break-even previously. Luke chopped his price target on the stock to $4, from $6. He keeps his rating at Equal Weight.
The estimate cuts come at a time when the global memory sector “remains in a state of flux,” with expanding bit growth couple with weakening end demand. Luke says the company has made progress on cost reduction, but notes that the stock will continue to be hampered by ongoing operating losses, $2.7 billion in long-term debt and lack of visibility on further industry consolidation. He notes that in the company’s November quarter, DRAM prices were down 35%-40% sequentially, while NAND flash prices were down 25%-30%.
As I noted yesterday, DRAM prices have fallen so dramatically that for some parts, current prices barely cover the costs of packaging and testing. Spot market prices for DRAM have hit an all-time low.
MU, which yesterday fell 15 cents, or 6.7% to $2.04, today is down another 18 cents, or 8.6%, to $1.91. |
