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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (33969)	5/29/1998 12:06:00 AM
From: DJBEINO	Read Replies (3) \| Respond to of 53903

The Ups and Downs of Mercurial Micron May 28, 1998 By Jim Evans If any stock has a cult following among traders and Wall Street watchers, it's Micron Technology. People love to follow Micron. It's made some traders a bunch of money. Merrill Lynch analyst Tom Kurlak covers it like an eagle (anything he does seems to get attention). And Micron is in a dynamic (and painful) market--memory chips. People alternately love or hate Micron. Witness the "Micron Sucks" forum on the Silicon Investor site. Love it or hate it, though, you have to acknowledge that Micron is a barometer of how the PC industry is doing. And right now Micron is suffering. In the past two weeks, the company's share price has drifted downward about 8 points. Nothing spurred this drop until Thursday's news that Goldman Sachs lowered its fiscal 1998 earnings estimate to a loss of 95 cents a share from a loss of 55 cents a share. With that news, Micron's price lost another 15/16 to settle at 23 13/16 Thursday. The move puts latecomer Goldman's estimates in line with the rest of the securities firms as Zack's consensus estimates have Micron losing 91 cents a share for fiscal 1998. So how low can Micron go? Most pundits, including Sanford Bernstein analyst Vadim Zlotinkov, say that the price would be lower now, if it weren't for unusually strong demand in Europe. But European orders have been dissipating, leaving many chip suppliers such as Micron (as well as Intel and Texas Instruments) in pain. Zlotinkov said that Micron's real agony is just beginning. "Micron is coming into a time when there is dramatic inventory reduction for both PC makers and resellers," he said. "Plus there is both a PC-demand problem and general economic problems in Asia. Both of those forces indicate that Micron will lose money until the end of this year." Currently, Zlotinkov rates Micron a "neutral" and says the stock shouldn't slide below 20 to 21. He said he'd think about raising his rating if the time and price were right, which he expects to happen sometime in the late third or middle fourth quarter. Only then, when business conditions are a little better, will Micron be truly attractive again. Right now seven analysts rate Micron a "hold," five a "strong buy," four a "moderate buy" and one a "moderate sell." "I believe that unless Asia worsens dramatically we will see DRAM supply and demand align sometime in the first half of 1999. And you want to own the stock six months before that happens," Zlotinkov said. That means that investors have to be patient. Because if the Asia situation declines in the short term, and it looks like it will, there might be some buying opportunities below 20. At that price Micron is a good stock to own. After all, its 52-week high is 60 1/16, and it's a market leader in DRAMs. History shows that no matter how bad things look, Micron will not be down forever. Jim Evans is finance editor at UPSIDE.