Macro headwinds, the demand-supply mismatch, increasing competition and a consequent decline in memory product prices has put pressure on Micron Technology's (MU) top line growth. In addition to persistent weakness in the memory market, the temporary internal operation disruptions witnessed by the company last quarter led to a 12% annual decline in its revenue. Additionally, lower selling prices combined with the increasing investments in developing new technologies has put a downward pressure on Micron’s bottom line.
Nevertheless, Micron has managed to hold its ground well while many of its competitors have had to sell out or shut down operations due to mounting losses. It remains the only major U.S. memory chip-maker in a market increasingly dominated by Korean and Japanese manufacturers such as Samsung (SSNLF.PK) and Toshiba.
Micron is set to announce its Q2 2013 earnings on March 21, 2013. Though the demand-supply balance is improving, we do not expect any significant improvement this quarter as the demand has yet to reach a level to stabilize the memory market. However, we remain optimistic on Micron’s long-term growth potential. Its declining inventory levels for all the three divisions -- NAND, DRAM and NOR -- reinforce our belief of a revival in the memory market this year onward.
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