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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (64682)	6/24/2014 12:55:31 AM
From: seminole	Read Replies (1) \| Respond to of 95536

If they sell the news on MU in the AM, I plan to get me some more.

To: Donald Wennerstrom who wrote (64682)	6/24/2014 7:33:56 AM
From: Sam	1 Recommendation Recommended By Donald Wennerstrom Read Replies (1) \| Respond to of 95536

FWIW, Micron is now up in pre-market to 31.70 on about 240k volume. Merrill's Simon Woo stays positive on Micron, raises PO to 43 from 40, lifts EPS estimates to 2.42 in 2014, 3.12 and 3.45 in 2015 and 2016. Those are GAAP estimates, not non-GAAP, which of course makes it difficult to compare with other estimates, and since various groups combine with it other GAAP estimates to arrive at their "consensus," it really messes with numbers. I have no idea why he does that. New guidance and industry outlook offer margin upside; Buy We raise our PO from $40.0 to $43.0 due to the more positive outlook. New guidance following May-end FQ3-14 results clearly confirms up-cycle or record-high profit for not only FQ4-14 but also FY15. The key contributor should be ASP - less cyclical and smaller erosion vs cost curve. Management’s strategies (mix improvement, new tech deployment, disciplined capex, etc.) also show low execution risk (eg, proprietary brand for SSD, mobile DRAM strength leveraging Elpida, etc.). Net-net, we raise our EPS estimates for FQ4-14 and FY15 by 23% and 9% respectively at higher ASP. Our PO implies 14x FY15E P/E but 3.2x PBR; high ROE/FCF should warrant valuation premium vs historical average (1-2x PBR). FQ3-14 results exceeded consensus due to ASP & volume FQ3 results were broadly upbeat due to DRAM (higher ASP, bit growth); reported EPS (diluted) was $0.68 vs $0.61 consensus and our $0.59 estimate. NAND margin was slightly lower than our expectations due to higher start-up cost for Singapore fab conversion and proprietary SSD launch. That said, NAND accounts for less than 30% of total sales (vs DRAM about 70%). Our research shows FQ3 NAND OPM was only in the low teens vs DRAM in the high 20s (FQ3 OP mix: DRAM 87%, NAND 14%, NOR -1%; NOR still suffers loss); DRAM is the key earnings source. Implication for peers positive but negative for SPE, OEM, etc. Management reiterated chip supply constraints (industry consolidation, low impact from die shrink tech) vs solid demand (China, Apple, SSD); Micron’s target bit growth is still conservative for DRAM. This presents a low threat to peers. That said, we see some negative implication for semi equipment vendors (Micron’s low capex spend YTD vs guidance) and OEMs (DRAM price strength-driven BOM cost increase). Inotera, which enjoys an abnormally high margin selling all of its DRAM output to Micron, can also be hit if Micron asks for profit sharing on an equal basis.