Micron Tech Rises on Optimism for Memory-Chip Demand
Bloomberg News
December 17, 1998, 12:24 p.m. PT
Boise, Idaho, Dec. 17 (Bloomberg) -- Micron Technology Inc.
shares rose as much as 11 percent amid optimism that rebounding
demand and flagging competition will help the second-largest
maker of computer-memory chips return to profitability.
Micron rose 4 7/8 to 51 3/4 in late trading of 6.04 million.
Earlier, the shares touched 52 3/16.
Micron has struggled as prices for dynamic random-access
memory chips plummeted and sales of personal computers have
slowed. Now, several Asian DRAM makers, including No. 1 Samsung
Corp., have scaled back investments in new technology and have
slowed production to taper supply and stem the slide in prices,
which will help Micron nab more market share as demand perks up.
''We have started again another long semiconductor cycle,''
said analyst Dan Niles of BancBoston Robertson Stephens, who
rates the stock ''strong buy.'' ''It comes down to who is the
lowest-cost manufacturer and who has the best technology -- and
it's Micron.''
Niles today said he expects the stock to rise to $200 by the
end of 2001.
Micron will be able to take its current market share of
about 16 percent and increase it to more than 20 percent, Niles
said, and as the cycle peaks, he expects the company to be able
to earn as much as $3.00 a share in quarterly earnings.
Losses
Though the company lost money in the past three quarters and
is expected to turn in another loss for the quarter ended last
month, investors said the company is poised to recover.
''Micron is in a great position,'' said Ray Rund, portfolio
manager at Shaker Investments, which has about $450 million under
management and owns shares of Micron. ''They will reap the
greatest profits.''
Boise, Idaho-based Micron has invested in new technology and
has a strong cash position from a $500 million investment by
No. 1 computer-chip maker Intel Corp. earlier this year. That
means that as demand for DRAM picks up again, Micron has the
lowest costs and the most advanced manufacturing technology, Rund
said.
Asian manufacturers have been hamstrung in investing in new
technology because the economic woes in that region have left
many with little cash.
The shares of other chipmakers also rose today. Intel surged
2 13/16 to 116 15/16. Texas Instruments Inc. rose 3 11/16 to 83
1/16. Xilinx Inc. rose 2 1/2 to 58 15/16, and Altera Corp. rose
3 13/16 to 55 7/8. |
