Don, I do own MU shares. I am losing money in part due to the downgrade but as I said things are not all that bad in the Boise Valley. Front page story in the Idaho Statesman today:
Micron to start hiring again
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Micron Technology signaled its confidence the recession is fading by partially lifting a 10-month hiring freeze and restoring full pay to employees forced to take a 10 percent salary cut in the fall. The move helped convince industry analysts and area economists that a broader recovery was under way, although they cautioned that the economy isn´t going to come roaring back all at once. “I think we´re seeing the beginning stages of a return to more normal economic activity, but it may be awhile before we see significant gains in employment,” said state chief economist Mike Ferguson. “But we´re well on the way.”
Micron, the state´s largest private employer, has a profound impact on the Treasure Valley economy. And even though Micron did not release details on how many new workers it would hire, the news that the company was hiring at all was cheered as a sign that better days were coming.
The news sent sighs of relief through a battered tech industry, but it didn´t surprise Chris Gebhardt, president of a local recruiting firm, who said she´s seen other signs that the job market was starting to move again.
“We´re seeing a resurgence of hiring in all different areas in the industry in all areas of the country,” said Gebhardt, of HumanOxygen. “It´s not huge, but it´s enough to make companies look at whatever restrictions they have on their companies. Now they could be vulnerable to those who come in and hire employees away.”
Gebhardt said other Treasure Valley companies that reduced staff during 2001 — from Jabil Circuit to Hewlett-Packard — are again on a hiring trend.
“Micron has 44 jobs open in Boise for a mix of positions,” she said. “HP has 76 positions open. We´re definitely seeing a confidence level build, from the PC business all the way through to Microsoft software.”
Micron, which saw record losses in 2001, took a number of cost-cutting measures during the past year to help its devastated bottom line. In June, when it announced a quarterly loss of more than $300 million, the Boise semiconductor company implemented a hiring freeze and cut top executives´ pay by 10 percent.
In October, after reporting fiscal year-end losses of $521 million, pay cuts to top executives were increased to 20 percent and the company cut salaries of all workers earning more than $60,000 by 10 percent. In addition, Micron´s chairman and CEO Steve Appleton announced he would forgo his salary until the company returned to profitability.
The company also reduced non-essential business travel and required employees to take extended holidays during the Christmas season.
A company spokeswoman said Tuesday that top executives will still have their salaries docked by 20 percent, and Appleton will continue to work without pay until profitability is achieved.
“We´ve noticed that things are getting better,” said Julie Nash, strategic communications manager at Micron. “Steve (Appleton) is very sensitive to having to reduce people´s salaries, and he understands we all have expenses. He felt this was as good a time as any to reinstate salaries.”
Nash said the 10 percent reinstatement would start in the current pay period. She declined to say how many employees were affected by the pay cuts.
Hiring will resume in the manufacturing areas, Nash said, ending a freeze that allowed only critical technical positions to be filled.
“Right now we´re evaluating the needs we have, and jobs will be filled based on the most critical needs,” Nash said. She explained that during the freeze, mostly engineering positions were replaced, but the new policy will allow for hiring a much broader variety of jobs in the manufacturing area, from maintenance to electricians.
“The fact they´re opening all areas of hiring in manufacturing is just wonderful,” said Gebhardt, at HumanOxygen. “In the Boise valley, we have a lot of high tech folks waiting for that to happen.”
Ferguson, however, remains cautious about how the economy will shape up during 2002, saying state income tax returns for the state´s current fiscal year, which ends in June, could prove disappointing.
“Our state income tax has been coming in below expectations for the past several months,” he said, pointing out that Micron´s huge work force plays a crucial role in Idaho´s economy. The company has 10,100 employees in the Treasure Valley, and area retailers have come to anticipate Micron´s profit-sharing program, which gives hefty bonuses to employees in profitable quarters. Employees tend to splurge on big-ticket items in the valley when bonuses are distributed.
But Micron hasn´t turned a profit — and bonuses haven´t been given — since the fall of 2000.
“If you look at their payroll, it makes up about 2 percent of the state´s work force,” he said. “We won´t know the results of the fiscal tax year until May; that´s when we´ll have a better idea of the state´s fiscal health.”
But industry analysts forecast that improvements in the industry will continue and even bring large profits back to Micron by 2003.
“We just upgraded their stock and raised our numbers very high,” said Eric Ross, an analyst with Thomas Weisel Partners in New York. “We believe they´ll earn $4 per share in 2003.”
Ross said that projection is based on a steady rise in demand and a tightening of supply, driven by an increase of memory used in personal computers. Average memory usage in personal computers has doubled over the past year, he said.
“I just bought a laptop today with enough memory to download digital photos and run DVD movies,” Ross said. “The reason we´re seeing so much memory being used is there´s a huge need for it in applications.”
Matt Godfrey, an analyst with Semico Research Corp. in Phoenix, said spring is typically a slow period for memory sales but that the industry should do much better in the fall and winter months of the year.
“Now what matters are the end markets — businesses and consumers,” Godfrey said. “We think IT (information technology) spending with businesses will be coming back. All those companies that did upgrades in 1999 for Y2K are now looking to replace those computers.”
To offer story ideas or comments, contact Julie Howard
jhoward@idahostatesman.com or 373-6618
Edition Date: 04-03-2002 |
