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Samsung and SK Hynix’s relentless mobile DRAM push is slamming American rival Micron Technology ( MU ), which is expected to report a fiscal-second-quarter loss Wednesday for the first time in three years. A Nomura analyst reiterated his reduce rating — equivalent to a sell rating — and 8 price target Thursday on Micron stock. Micron stock fell 1.4% Thursday, to 10.50. Shares crashed 60% over 2015, and they are down another 26% year to date. The consensus of 33 analysts polled by Thomson Reuters for Micron’s fiscal Q2 results, slated for Wednesday afternoon, models $3.05 billion in sales, down 27%, and an 8-cent per-share loss ex items vs. 81 cents earnings per share in the year-earlier quarter. Three months ago, Micron guided to $2.9 billion to $3.2 billion and a loss of 5-12 cents per share ex items. Nomura’s Romit Shah expects Micron to issue Q3 guidance below the consensus model for the sixth consecutive quarter. For Q3, the consensus projects $3.2 billion in sales and 5 cents EPS minus items, down 17% and 91%, respectively. The DRAM (dynamic random-access memory) market “hit a downturn in 2015” amid weakening PC sales and a Samsung-driven oversupply. DRAM sales contracted by 2.4% for the year vs. 32% growth in 2014, Gartner analyst Viveca Woods wrote in a January report. Micron leads the American DRAM market, rivaling South Korean competitors Samsung and SK Hynix. The waning PC market — also slugging No. 1 chipmaker Intel ( INTC ) — forced Micron to shift gears, taking a mobile-centric approach. But mobile might not be Micron’s saving grace. In Q1, Micron posted a 13% year-over-year decline in mobile sales to $834 million. So, even if the DRAM in smartphones is increasing, it doesn’t mean Micron will seize the biggest chunk of that market. As DRAM oversupplies the market, pricing will remain competitive for another one to two months, Shah wrote. Then, prices will likely topple as DRAM-makers try to undercut one another. “Until supply cuts transpire (with Samsung being the key), the market will remain vastly oversupplied as average sales-price erosion is setting up to be greater in 2016,” he wrote in a research report. Like Samsung and SK Hynix, Micron is prepping for better technology with its 20-nanometer ramp. But Micron’s pace of cost declines, dependent on that ramp, won’t be sufficient to offset the pricing plunge, Shah wrote. Scalper1 News
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