Author Archives: Scalper1

A Samsung-driven memory glut will pressure Micron Technology ’s ( MU ) top line, an ITG analyst wrote Tuesday as he estimated 11.5% and 10.6% sequential pricing plunges for DRAM (dynamic random-access memory) and Nand memory in Q3. ITG’s Mark Bachman cut his Q3 expectations on Micron sales to $3.03 billion vs. his earlier model for $3.1 billion, in line with company guidance but below broad Wall Street forecasts. The consensus of 33 analysts polled by Thomson Reuters sees $3.05 billion in sales, down 27%, and an eight-cent per-share loss ex items vs. 81 cents earnings per share in the year-earlier quarter. Micron stock was down 1.7% in midday trading on the stock market today , a day ahead of the company’s scheduled Q2 earnings results. Needham and Credit Suisse analysts also cut expectations Tuesday on Micron. Earlier this week, a Nomura analyst reiterated a reduce rating, the equivalent of a sell rating, on Micron stock. Like Bachman, Nomura’s Romit Shah sees DRAM (dynamic random-access memory) prices down in Q2 . Bachman expects Micron to report Q2 results in line with guidance but “would not be surprised if Micron guided revenue lower than the current consensus.” DRAM and Nand (flash) pricing declined 7% and 2%, respectively, in March, he wrote. “Pricing continues to deteriorate from continued weakness in the PC and mobile end markets,” he wrote in a research report. And Micron’s shift to a mobile focus isn’t paying off. Mobile sales fell 13% year over year in Q1. DRAM Pricing Struggles DRAM sales comprise the lion’s share of Micron’s sales but are deteriorating faster than Nand sales, Bachman wrote. Year over year, DRAM sales fell 37% in Q1, vs. a 5% decline in Nand. Flash memory pricing is more elastic, he noted. “As Nand prices fall, storage consumers increasingly substitute mechanical hard drives with Nand-based solutions,” he wrote. “While the market for DRAM is expanding, it is not a substitute for a relatively inferior good.” Sequentially, DRAM sales prices fell 4%, 10%, 7% and 13% over the last four quarters, Needham analyst Rajvindra Gill wrote in a report. Gill downgraded Micron stock to underperform from a hold rating. Gill sees consensus expectations for a 12% jump in fiscal 2017 sales as “overly optimistic,” considering a forecast 19% decline in fiscal 2016. For 2016 and 2017, Gill expects DRAM pricing to fall 30% and 14%, respectively, vs. a 13% decline both years in Nand prices. Credit Suisse analyst John Pitzer models a 10% sequential decline in Q3 DRAM pricing vs. earlier forecasts for a 5% decline. Pitzer rates Micron stock outperform and has a 20 price target. Pitzer expects a recovery in August and November on normal seasonality, cost reductions on Micron’s 20-nanometer ramp, the consolidation of Inotera, and optionality with 3D Nand and 3D X-Point in conjunction with Intel ( INTC ). Gill, on the other hand, says that Samsung’s tech is too far ahead for Micron to catch. “We believe Samsung remains well ahead and that by the time Micron has enough capacity on 3D to realize cost/bit benefit, Samsung will already have the ability to drive pricing down and largely negate Micron’s profitability progress,” he wrote.