Micron Technology (MU) is in the news this week because of the likelihood that the company will soon be the rehabilitation sponsor for Elpida Memory.
Recently, the bankruptcy managers of Elpida decided to select Micron as its sponsor for rehabilitation. With this deal, Micron will provide Elpida with $2.5 billion in financial assistance. The money will be divided between improving Elpida's battered finances and repaying the company's many debts. Elpida will also be allowed to keep two of its plants in the Hiroshima and Akita prefectures. This is necessary, as the company is Japan's only manufacturer of random access memory chips. Very soon, Micron will receive preferential negotiation rights, with the final deal likely to conclude toward the end of the month. Micron was in partnership talks with Elpida until just before the latter company filed for bankruptcy protection in February this year. If all goes well, Elpida will submit a corporate rehabilitation plan based on the proposal from Micron to the Tokyo District Court by August.
The competition for the role of rehabilitator was stiff, but Micron came out on top mainly due to the fact that it plans to keep the company's two key plants in the Hiroshima and Akita prefectures and to keep all of the employees currently working for Elpida. This made the company the most favorable option, as far as Elpida was concerned.
In order to do this, Micron will have to dip into its cash reserves and issue corporate bonds. This leaves many stockholders wondering if the company still has their best interests at heart. I feel that this uncertainty is justified, especially as Elpida will most likely require further measures in order to fully recover, such as debt forgiveness from its major creditors. It seems that Micron may be backing a horse that will fail anyway. A favorable outcome will be difficult to achieve, and this is highlighted by the fact that other competitors in the race to acquire the company, such as Hynix, pulled out of the running simply because it would be too costly to help the failing company out.
However, if you look more closely at this move, it seems that Micron may want to create a business relationship with the manufacturer. This could mean, in the long run, that Micron will be able to produce chips at cheaper rates.
In other news, Micron has successfully created the PoP Video Pico Projector adapter, which connects to your iPhone via a retractable 30-pin dock connector and displays video at the iPhone's full 960 x 540 resolution. So far, there has not been much to get excited about when it comes to Pico projectors, but this new offering from Micron displays higher resolution than the rest, and is small and cheap enough to be practical. The application allows you to tweak the image and, considering that the battery will run for approximately two hours, you should be able to get through an average feature length film. Although this technology is far from being perfect, Micron is at present the leader in this regard. Pico projects appear to be a significant development, and may be the next big thing in video projection technology. We will have to wait and see its impact.
Despite the projected success of the product there are a few questions that remain. For example, will the projector be bright enough to see the images clearly? Another thing that there seems to be very little information about is whether or not the projector will have built-in speakers. Although this seems like a promising step forward for Micron, we will need to watch the product closely to discover its true worth and likelihood for success.
Micron competitor Atmel (ATML) recently crashed toward the bottom. This was in line with what the company predicted for its first quarter. The company, however, maintains that it is "well-positioned to capitalize on the improving industry environment." Despite this positive attitude, shares continue to drop, and it may need to start reassessing is position in the market. Revenue simply is not bouncing back as quickly as Atmel's investors hoped that it would. For now, the company is waiting for Google's (GOOG) Android tablets to take off, which is just not happening yet.
Other Micron competitors have also been in the news of late. A patent held by Cypress Semiconductor (CY) recently was reexamined by the U.S. Patent and Trademark Office, and the validity of the patent was confirmed. This means that the two claims that Cypress has made against GSI Technology (GSIT) are also valid. The company was also allowed to level an additional 64 claims against the company based on the reexamination of the patent. A legal dispute will inevitably follow, the length and extent of which are still unknown.
SanDisk (SNDK) recently released its cloud storage manager, which allows users to control of all their cloud based storage services with just one application. In addition, the application is user friendly which adds to its attractive nature. This marks the SanDisk's first step into the smartphone applications domain, an area that it has never set foot in before. It supports various cloud services such as Box.net, Dropbox, Google Docs, Picasa, SugarSync, SkyDrive and Facebook. The move poises SanDisk for substantial growth, so Micron investors will want to keep an eye out.
OmniVision Technologies (OVTI), a leader in advanced digital imaging solutions, recently announced that its "its OV6922 CMOS image sensor has been designed into Ambu's aScope 2, a single-use intubation scope intended for medical procedures such as difficult intubation and percutaneous dilatational tracheostomy." This will result in clearer imaging with no cross-contamination. However, the main advantage of this is that it will significantly reduce the risk for patients. If the medical community takes to the new advancement, OmniVision could support itself for the long run on these contracts.
So, what does this all mean for Micron investors? With competitors making big moves, Micron should hope its Elpida acquisitions works out for the short term and the long term. The success of that should keep it afloat and healthy. If all goes well, I expect Micron to be trading between $8 and $9 in early 2013. Anything less, and Micron may be banking on new innovations sooner than it would like to.