Micron higher as Elpida estimates released

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.

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Comments (3)
  • Philip Marlowe
    , contributor
    Comments (1582) | Send Message
    If that 2.5 EPS estimate is true, then Micron is trading at a forward P/E of 5.7! This stock should be at least $25 by now. I guess it is investors' long memories of industry oversupply and losses that keeps them from driving up the stock.
    9 Aug 2013, 01:24 PM Reply Like
  • nScout
    , contributor
    Comments (198) | Send Message
    Friday July 9 2013, the very day of Micron's presentation, Orbis Investment Management (U.S.), LLC ("OIMUS"), Orbis Investment Management Limited ("OIML") and Orbis Asset Management Limited ("OAML") filed a 6.22% ownership of MU common stock.
    10 Aug 2013, 05:59 AM Reply Like
  • keelfoot
    , contributor
    Comments (15) | Send Message
    All you need to do in order to evaluate this sector and this stock is to walk into Wal-Mart and buy a SanDisk 32 GB Cruzer for $19.95! Come on people, this is not exactly rocket science! The supply/demand balance does not favor Sandisk at this time. End of story. Move on to something that is going to make you money.
    11 Aug 2013, 01:52 PM Reply Like
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