Crucial recently introduced the New Crucial Ballistix Sport Design for the gamers looking for a fast and a responsive performance. Crucial is the global brand of Micron (MU). The new Crucial memory product has a unique design, a good-quality DRAM, and provides a rich gaming experience. In this article, I want to show how the improving market for the video game will help Crucial to increase its Ballistix revenue by 48% in the next five years. This factor will enable Micron to improve its price multiples.
Why will Micron achieve this feat. According to DFC Intelligence, a market researcher, the global market for the video game will increase from $67 billion in 2012 to $82 billion in the next five years. This forecast also affects the games on a personal computer. Micron's new memory product will benefit from the trend. This factor will improve the sales of the product and enhance Micron's price multiples.
Financial
Micron's sales improvement is inevitable. Crucial has improved the company's price multiples in the past with its unique memory products. It will do so with the new gaming solution. Crucial made progress on the solid state drive market by selling a record amount of the solution in the second quarter. In the first quarter, Crucial enabled Micron's solid-state drives sector to maintain its momentum. In the fourth quarter, Crucial continued to drive the revenues of Micron.
Micron And Gaming
Crucial has created numerous gaming memory products. Crucial Ballistix Sports Series delivers a dependable memory performance that enables a fast load time and a better system activity. Crucial Ballistix Sport XT brings a reliable thermal performance and makes for an easy configuration in an Intel-supported solution. The Ballistix Tactical product ensures a fast speed and a good time relative to the competing products.
The newly introduced memory product increases the efficiency of the customer's laptop and their mini-motherboard. The solution can reduce its DRAM consumption to boost a longer battery life. It can also deliver a fast and an enjoyable gaming experience. "The Crucial Ballistix Sport series is designed to provide mainstream users and performance enthusiasts with a reliable, no-hassle gaming experience," said Jeremy Mortenson, senior product manager, Crucial.
Micron needs to introduce the product to meet its future projections. Fortunately, the market forecast for the video game and the interactive entertainment industry is positive.
Looking at Micron's revenues, we note that Crucial's memory products are important for Micron's revenue growth. So it can be said that Micron will make a progress with the new memory product in the long term.
With a price to sales of 1.64, Micron is trading reasonably, especially given that it has a gross margin of 17.61%. The introduction of the new product will in time increase the company's revenues, help it to return to its former profitability, and improve its dismal earnings per share of -1.12.
Competition
With a price to sales of 1.64, compared with 2.76 for San Disk (SNDK), 28.94 for MoSys (MOSY), and 1.06 for Integrated Silicon Solution (ISSI), and an EPS of -1.12, compared with -0.64 for MoSys, 1.92 for San Disk, and -0.16 for Integrated Silicon Solutions, Micron is on par with its direct rivals. Integrated Silicon Solutions, San Disk, and MoSys have some competing products in the market. However, Micron's new solution will make it to become an even more competitive enterprise.
Conclusion
There are risks involved with buying a Micron share. In the second quarter, the company reported a net loss of $275 million. But this was an improvement on a net loss of $282 million reported in the second quarter of the year prior. Still, based on the past contribution of the products from Crucial and the growth projections of the video games sector, we can say the new product will improve the revenues of Micron in the long term. Looking at its price multiples and increasing DRAM prices, we reverse our earlier position and say buy Micron on a short term basis.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.