In tandem with its summer analyst day, Micron (MU +1.9%) has released slides (I, II) providing initial financial estimates for just-acquired Elpida.
On a quarterly basis, Micron estimates Elpida will post revenue of $1B-$1.1B, a cash gross margin of 47%-53%, and operating cash flow of $500M-$550M in the near-term. The Japanese DRAM maker is expected to have $1B in cash and $1.3B in debt on its balance sheet.
RBC's Doug Freedman calls the revenue and gross margin figures better than expected. He now thinks Micron could post FY14 (ends Aug. '14) EPS of $2.50+, above a prior $2-$2.25 forecast and a $1.76 consensus. He also likes Micron/Elpida's FY14 capex budget of $2.6B-$3.2B (compares with FY14E revenue of $13.2B).
Also of note: Micron expands NAND flash industry bit supply growth of 40% in 2013, and 43% in 2014. Those growth rates are lower than those for any year from 2008-2012. SanDisk (SNDK +0.4%) sold off recently on concerns about rising supply growth.
DRAM industry bit growth is expected to total 27% in 2013, and 25% in 2014. Those rates are lower than the ones for any year from 2008-2012, save for '09.