Author Topic: MU - Micron Technology Inc.  (Read 18500 times)

constructive

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Re: MU - Micron Technology Inc.
« Reply #30 on: June 26, 2015, 08:36:16 AM »
Micron is down 19% today on weak earnings and guidance, accompanied by lots of downgrades. Rolling out their latest process technology is not going smoothly.

This looks really cheap to me. The memory market is a lot less competitive than it has ever been before, with Samsung, SK Hynix and Micron manufacturing 90% of DRAM. If you look at the analogy to hard drives, Western Digital and Seagate have done very well since they consolidated their market down to 3 companies.


AzCactus

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Re: MU - Micron Technology Inc.
« Reply #31 on: June 26, 2015, 08:43:21 AM »
This looks crazy cheap to me too.  However, I haven't taken a deep dive into the company. 

Jurgis

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Re: MU - Micron Technology Inc.
« Reply #32 on: June 26, 2015, 09:24:13 AM »
Although I have invested in the past in WDC/STX on the same premise: that the competition is down because of "oligopoly", I think it's a bit risky premise.

In case of memory, you have Samsung who does not have to behave rationally. (Or they might behave rationally from their side, dumping memory to get marketshare and make money from other chips).

It still might be that MU is cheap enough here now. I'll have to look.

I think this is also a risky premise for airlines.

Disclosure: no positions in any of the above.
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constructive

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Re: MU - Micron Technology Inc.
« Reply #33 on: June 26, 2015, 11:44:50 AM »
Although I have invested in the past in WDC/STX on the same premise: that the competition is down because of "oligopoly", I think it's a bit risky premise.

In case of memory, you have Samsung who does not have to behave rationally. (Or they might behave rationally from their side, dumping memory to get marketshare and make money from other chips).

It still might be that MU is cheap enough here now. I'll have to look.

I think this is also a risky premise for airlines.

Disclosure: no positions in any of the above.

There is plenty of evidence that the memory market is more profitable than it has ever been before. I believe the industry as a whole was not earning its cost of capital for 30+ years, and now they are earning well above that mark and should continue to.

Samsung is not necessarily irrational. Their short term growth plan is overaggressive, but they can't change capex strategy on a dime to be responsive to short term pricing. Long term bit growth is still over 20%, so each of these companies obviously needs some kind of growth plan.

Airlines are completely different since there are still dozens of international competitors, high levels of regulation, and low barriers to entry.

RadMan24

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Re: MU - Micron Technology Inc.
« Reply #34 on: July 01, 2015, 11:34:54 AM »
Drexel Hamilton Raised price target to $50. Does anyone have their thesis?

Well..a year later and they cut to sell and a $20 price target. Citing: "Predicated upon a view Samsung’s strategic interests bring willingness to accept lower memory margins, DRAM price drops are liable to continue," said Whittington. "PC DRAM price weakness has spread to mobile, reducing margins and earnings estimates as Samsung brings process cost drops to customers."

This was when Micron was at $25. Also believe DRAM and eventually NAND gross margins will fall for Micron.

But the company has executed very well over the past few years, starting from 2010 to now, management has done a very good job. 


jawn619

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Re: MU - Micron Technology Inc.
« Reply #35 on: July 09, 2015, 02:06:35 PM »
Stock is looking kinda cheap

dbuch

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Re: MU - Micron Technology Inc.
« Reply #36 on: July 10, 2015, 07:01:06 AM »
It appears the market doesn't think the oligopoly is working. ASPs fell as expected due to PC weakness but costs were higher. I think the reason is the transition to 20nm. They are running parallel lines with higher WIP, moving to DDR4, I'm sure there are some hiccups in the process as well. Micron still thinks they will be getting 20-25% cost reductions and pricing should largely stabilize.

Fundamental technology migrations yield fewer bits per dollar so the costs to oversupply the market are getting higher and should be a governor on irrational oversupply. Samsung isn't just going to build fabs to gain market share when it continues to get more expensive to do so.

What do they have to gain? They have 40% market share and trying to put Micron out of business wouldn't help them as Intel would likely just buy the assets and then Samsung is competing with Intel instead of Micron, they replace one competitor with another. Knowing this, they'll remain rational and limit supply to demand the best they can. It probably won't be perfect and their could be some ASP degradation but it should be substantially below any cost reductions which will increase gross margins.

On the NAND side they are transitioning to TLC and 3D which should be more competitive and reduces costs. The majority of the cost declines will be passed on to customers but margins have room to move up here as well since the others are already using TLC and current pricing allows for higher margins compared to what Micron earns.

AJDelphi

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Re: MU - Micron Technology Inc.
« Reply #37 on: July 13, 2015, 12:59:09 PM »
Einhorn pretty much lays out his thesis for Micron and his valuation a few years down the road in his Q2 letter.

http://www.valuewalk.com/2015/07/greenlight-q2-letter-netflix-nflx/

Wilson-TPC

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Re: MU - Micron Technology Inc.
« Reply #38 on: July 13, 2015, 03:24:08 PM »
He should've sold like Klarman when MU was at 35. That was 10x P/E which is pretty fair for a cyclical business.

Second half of this year should see some boost as window's 10 release will help PC sales.

I haven't looked at the projected earnings yet... maybe it's time I should.
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