- Samsung is rumored to become the main supplier of application processors for Apple's new iPhone 7, replacing TMSC.
- Last week sources claimed Samsung was replacing Qualcomm's Snapdragon chip inside the Galaxy S5 for the Exynos which is made in-house.
- As Samsung grows its semiconductor business, I expect it to seek more market share in DRAM and NAND, hurting Micron.
- Micron remains a hold.
- Both SanDisk and its contemporary Micron have been hurt by falling NAND prices.
- The two companies, however, are enjoying robust growth in the hot SSD market.
- SanDisk is more likely to be favored by SSD revenue due its smaller revenue base and sound SSD strategy.
- We believe projected long-term growth rates for Micron and its peers to be too optimistic and we expect growth to slow down after 2016, preventing PE multiple expansion(s).
- SanDisk's recent profit warning shows potential headwinds in the NAND Flash memory space, which represents 28% of Micron's revenues.
- Samsung's new $14.7B chip factory has a high likelihood of disrupting the delicate supply-demand balance in the DRAM industry, which accounts for 68% of Micron's revenues.
- Even if Samsung wasn't building its new chip factory, it has significantly more resources than Micron, which gives it the ability to undercut prices to potentially steal market share.
- Micron and Intel are delivering divergent messages regarding the potential of 3D NAND.
- The economic and marketing challenges of 3D are daunting for Micron.
- Micron's 3D capacity will be severely limited until 2017.
- Many questions remain to be answered, but 3D has the potential to a big win for Micron.
- Northland Securities is reporting that Samsung has plans to ramp up capacity in DRAM.
- Micron fell nearly 3% Tuesday on the news.
- With 68% of its revenue coming from DRAM products, Micron is extremely vulnerable. Micron remains a hold.
- The revenue number got the attention in the Q1 earnings report, but the rest of Micron's quarterly performance was solid.
- The lower revenue number is largely due to upgrades in DRAM production lines and not due to a slowdown.
- Micron still has Apple and Intel among its biggest customers.
- The stock still maintains a forward P/E ratio of just 8 and remains undervalued relative to its projected growth.
Micron Earnings Redux/Intel Earnings Preview: Muddied Waters For Semis, But Valuations Reasonable
- Micron is probably range-bound between $30 and $36 for at least a quarter.
- Intel isn't as cheap as it was, trading at 8(x) cash-flow today.
- Some of sector's bullish sentiment now receding.
- Both stocks fully valued in the low $40's.
- Krzanich trying to drive revenue growth for Intel.
- Micron is seeing soft pricing and production in the DRAM market place, which will result in flat Q2 2015 revenue performance relative to Q2 2014.
- Although Micron has many leading institutional investors holding its shares, David Einhorn and Whitney Tilson have been reducing their stakes since March.
- Value of Micron's unrealized tax is more than offset by premium cost to retire its dilutive convertible bonds.
- Samsung's new $14.7B chip factory may potentially serve to make the supply-demand relationship in the memory chip marketplace less favorable than it has been recently.
Micron's Mixed Q1 Earnings Have Sent Its Shares Lower, Should You Buy The Dip?
- Q1 2015 earnings were released Tuesday.
- Earnings per share beat expectations, but revenue fell short.
- Generated $923 million of free cash flow.
- The stock has responded by moving lower.
- The whisper number is $0.93, one cent ahead of analysts' estimate.
- Micron has a 55% positive surprise history (having topped the whisper in 16 of the 29 earnings reports for which we have data).
- The overall average post earnings price move is 'negative' (beat the whisper number and see weakness, miss and see weakness) when the company reports earnings.
Micron Technology: Prevent Investment Loss By Identifying A Margin Of Safety
- Identifying a margin of safety is essential to conservative investing.
- Buying at a discount to revenue is one method of finding a margin of safety.
- Plotting the margin of safety on a chart is recommended for the visual investor.
Micron Earnings Preview: Our Estimate Is That Stock Still 25% Undervalued
- Fair or intrinsic value now estimated at $45 per share.
- Supply still constrained and disciplined, while competition seems to remain rational.
- EPS and revenue estimates still tracking higher.
Micron Approaches Its First Quarter Earnings Release Near Highs
- MU has increased more than 400% over the last two years.
- Management continues to dilute shareholders with millions of new shares.
- Samsung's 850 entry demonstrates Micron has its work cut out if it wants to capture marketshare.
- Micron earnings report is Jan 6th.
- Micron will have to explain "step function lower" costs on 3D NAND vs. 2D NAND to analysts.
- Intel will have a sympathy move on this explanation and should have some good news for CES starting on Jan 6.
Micron Technology: Key Beneficiary Of The Smartphone Revolution
- DRAM and NAND, MU’s key technologies in multi-year growth environment.
- Explosive growth in smartphones and SSDs, the key demand driver.
- Wider focus on higher-value end market should reduce earnings volatility.
- Trading on a single digit P/E multiple, MU looks attractively valued.
3 Reasons Why Micron Is One Of My Top Picks For 2015
- Micron just posted record revenues, earnings and cash flows in 2014.
- Earnings and revenues are forecast to jump another 13% in 2015.
- The company should benefit from strong demand in both DRAM and NAND markets.
- The stock trades at just 9 times forward earnings - a significant discount to both the industry (15x) and broad market (18x) averages.
Micron: A Big Value Story Most Of The Market Is Missing
- After a very solid first half of 2014, the stock of Micron has spent the last six months moving in a relatively narrow trading range consolidating first half gains.
- However, core business fundamentals are improving, the stock is very cheap and earnings estimates continue to rise.
- Why I believe the stock has 40% to 50% upside over the next 12 months is profiled below.
Micron: Extreme Undervaluation And Massive Growth Potential
- The two major industries Micron operates in are poised to grow at huge CAGRs each over the next five years.
- Micron currently trades at incredibly low valuations due to problems of the past that have already been resolved.
- Major institutional investors have large stakes in the company.
- Analysts are extremely bullish on the stock, and have become even more so in the past year.
- The company has many potential catalysts, as well as several notable risks that investors should be aware of.
Yesterday, 7:27 PM
- Micron (NASDAQ:MU), SanDisk (NASDAQ:SNDK), and InvenSense (NYSE:INVN) have joined Cirrus Logic, NXP, and several RF chipmakers in rising AH in response to Apple's FQ1 beat and stronger-than-expected iPhone sales print (74.5M units, +46% Y/Y).
- Micron became an iDevice mobile DRAM supplier through the Elpida acquisition. SanDisk has been both an iPhone NAND flash and MacBook SSD supplier, but there have been reports the company's recent woes are partly due to losing Apple as an SSD client. InvenSense's motion sensors were designed into the iPhone 6/6 Plus.
- MU +1.3% AH to $30.02. SNDK +1.3% to $79.99. INVN +1.7% to $15.19. InvenSense reports on Thursday. Micron was hit hard earlier today by Microsoft's FQ2 Windows figures and related commentary.
Yesterday, 12:35 PM
- Micron (MU -3.6%), Nvidia (NVDA -3.4%), Seagate (STX -3.7%), and Western Digital (WDC -3.4%) have joined Intel and HP among the ranks of PC-exposed names off sharply in response to Microsoft's results and guidance. The Nasdaq is down 1.5%.
- The 13% Y/Y drops reported by Microsoft for Windows OEM Pro and non-Pro license revenue are getting a lot of attention, as is the fact Microsoft partly blamed the former on slowing business PC demand (also reported by IDC).
- Microsoft also stated non-Pro revenue was hurt by a mix shift towards cheaper PCs (typically feature cheaper processors, integrated GPUs, less DRAM, and smaller hard drives) for which Windows license fees are lower.
- Seagate and Western both tumbled yesterday due to the former's soft calendar Q1 guidance. Western reports after the close.
Fri, Jan. 23, 9:26 AM
- Tezzaron Semiconductor, a maker of 3D memory ICs and SoC memory blocks, has obtained a license for Rambus' (NASDAQ:RMBS) ReRAM IP, along with related specs and validation suites.
- Tezzaron plans to "build ReRAM into storage-class 3D memory devices for military, aerospace and commercial applications," as well as to "implement ReRAM in an assortment of SoCs, FPGAs and processors." The company claims its Novati Technologies unit can use ReRAM to "add hundreds of megabytes of storage to a logic device manufactured in a standard commercial fab." The first Tezzaron ReRAM products are due in 2016.
- Though still in development-stage, ReRAM's proponents have declared it to be a potential flash memory replacement (more than a few would-be replacements have come and gone over the years), arguing the technology can deliver better performance and endurance, lower power draw, and a simpler chip architecture than NAND flash. Startup Crossbar Technologies has its own ReRAM development efforts.
- Rambus, which bought ReRAM developer Unity Semiconductor in 2012, has also struck licensing deals for the technology with Micron (NASDAQ:MU) and Freescale (NYSE:FSL) - Micron and Sony researchers showed off a 16Gb ReRam chip last February. Rambus' Q4 results arrive on Monday.
Wed, Jan. 21, 6:00 PM
- SanDisk (NASDAQ:SNDK) guides on its Q4 CC (webcast) for Q1 revenue of $1.4B-$1.45B, below a $1.6B consensus. Likewise, 2015 guidance is for revenue of $6.5B-$6.8B, below a $7.23B consensus.
- Revenue is expected to be down Y/Y in 1H15 before rebounding in 2H15. Q1 gross margin is expected to be roughly even with Q4's depressed 45%.
- Micron (NASDAQ:MU) is following SanDisk lower, as it did following the NAND rival's Jan. 12 warning.
- SanDisk's Q4 results, details
Tue, Jan. 20, 9:16 AM
- Citing positive checks, Susquehanna has upgraded Micron (NASDAQ:MU) to Positive, and upped its target by $7 to $38.
- The upgrade follows seven months during which Micron has largely moved sideways, after soaring from late 2012 to mid-2014. Shares slipped two weeks ago due to Micron's light FQ2 guidance, and last week due to a Samsung DRAM expansion report. They now go for 7x estimated FY16 (ends Aug. '16) EPS.
- Update: More details here. Susquehanna's checks point to embedded NAND share gains "particularly in China and in mid-to-low-end smartphones where growth is higher than the high end market," something it expects will boost Micron's NAND margins. DRAM margins are expected to further rise in 2H15 thanks to a mix shift towards server and DDR4 DRAM. DRAM wafer capacity is expected to grow at a moderate 5% annual clip.
Tue, Jan. 13, 2:20 PM
- Northland Securities reports Samsung (OTC:SSNLF) is purchasing more DRAM equipment, and plans to ramp capacity. The firm thinks Micron (MU -2.3%) is likely to see the most pressure from Samsung's move, since it's a high-cost producer. (source: Notable Calls)
- Micron is adding to the Monday losses it saw on account of SanDisk's Q4 warning. Shares also sold off in July in response to Samsung capacity expansion fears, but later recovered .
- Goldman has been voicing concerns about rising DRAM capex for a while. Micron, for its part, struck a positive tone during last week's FQ1 CC about DRAM supply/pricing, and has long been arguing the industry's consolidation has changed its dynamics.
- Samsung had an estimated 41.7% Q3 DRAM market share. SK Hynix (HKSCF) had 26.5% of the market, and Micron 23.7% (source: Statista).
Mon, Jan. 12, 9:12 AM
- SanDisk (NASDAQ:SNDK) now expects Q4 revenue of $1.73B, below prior guidance of $1.8B-$1.85B and a $1.84B consensus. Gross margin is now expected to be at 45%, below prior guidance of 47%-49%.
- NAND rival Micron (NASDAQ:MU) is following SanDisk lower. Last week, Micron offered more cautious remarks about its NAND ops (28% of revenue) than its DRAM ops (68% of revenue).
- SanDisk's full Q4 results are due on Jan. 21
- Previously: Micron's FQ2 DRAM and NAND guidance
Thu, Jan. 8, 4:18 PM
- Hit hard on Tuesday amid a market rout, chip stocks have more than made up for it today: The Philadelphia Semi Index (SOXX +3%) handily exceeded the Nasdaq's 1.8% gain. The index posted a 1% gain yesterday.
- Micron (MU +4.9%) has been one of the standouts, more than recouping yesterday's post-earnings losses. Ditto Freescale (FSL +9.2%), which benefited from a Deutsche target hike, and Marvell, which got a lift from an MKM note. Others: NVDA +3.8%. NXPI +4.7%. AVGO +5%. SWKS +4.5%. CY +6.1%. CODE +5.9%. CAVM +5.2%. SWKS +4.5%. SLAB +4.5%. KLIC +3.8%. SMTC +3.6%. ATML +3.7%. FCS +4.2%. TSEM +4.2%.
- As is their custom, both chipmakers and their clients have been unveiling plenty of new products at CES.
- ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Wed, Jan. 7, 7:18 PM
- Micron (NASDAQ:MU) received plenty of estimate cuts after providing soft FQ2 revenue guidance to go with mixed FQ1 results, but no downgrades arrived. Shares closed down 2.3% after falling as much as 6% in AH trading yesterday; a broad market rally helped limit the damage.
- On the CC (transcript), Micron noted technology transitions, including a migration to a 20nm manufacturing process, will affect FQ2 DRAM output. CEO Mark Durcan: "I think we will see as we move out in time, a get back to sort of a more normal bit growth rate quarter-over-quarter ... when you deploy technology sometimes there is disruptions in manufacturing."
- President Mark W. Adams stated DRAM pricing "remains favorable overall" post-holidays. Softness was seen in NAND pricing in FQ1 and also December, but there are some signs of improved pricing lately. A NAND competitor (almost certainly Samsung) has increased its supply to third parties, pressuring industry margins.
- In the Q&A, analysts were generally more concerned about NAND (28% of revenue) than DRAM (68% of revenue). Micron insisted recent NAND pressures are temporary, and that it expects better performance later in the year with the help of rising tri-level cell (TLC) NAND output. Samsung has been busy ramping 3D NAND output.
- Stifel (Buy) defends management's DRAM strategy. "Previously, slowing production would result in potential market share losses. Today, DRAM companies are focused on maintaining profitability rather than market share."
- Shares currently go for 7.7x FY16E (ends Aug. '16) EPS.
- FQ1 results, guidance/details
Tue, Jan. 6, 4:27 PM
- Micron (NASDAQ:MU) guides in its FQ1 earnings slides (.pdf) for FQ2 revenue of $4.1B-$4.3B, below a $4.53B consensus. DRAM production (bit growth) is expected to fall by a high-single to low-double digit % Q/Q in the seasonally weak quarter, and trade NAND flash production is expected to be flat to down by a low-single digit %.
- Both DRAM and trade NAND prices are expected to be flat to down by low-single digits. DRAM cost/bit is expected to be flat, and trade NAND up by mid-single digits.
- FQ1 gross margin was 36%, up from 33% in FQ4 and 32% a year earlier. GAAP SG&A spend rose 10% Y/Y to $193M, and R&D spend 18% to $376M. Op. cash flow totaled $1.59B, and capex $669M.
- FQ1 DRAM figures: 68% of revenue, 8% Q/Q bit growth (mobile/server demand), 1% ASP growth, 4% cost/bit decline. FQ1 trade NAND figures: 26% of revenue, 20% bit growth (mobile/SSD demand), 6% ASP decline, 5% cost/bit decline. Other NAND was 2% of revenue, and NOR flash 3%.
- Micron ended FQ1 with $5.3B in cash/marketable investments, and $5.8B in debt.
- SanDisk (NASDAQ:SNDK) has moved lower in sympathy with Micron.
- FQ1 results, PR
Tue, Jan. 6, 4:09 PM| 19 Comments
Mon, Jan. 5, 5:35 PM
Dec. 23, 2014, 1:54 PM
- Rosenblatt Securities' Jun Zhang thinks China Mobile plans to procure a whopping 200M 4G smartphones in 2015, after selling 75M-80M in 2014 (~20% less than originally planned). Smaller rivals China Telecom and Unicom are seen collectively procuring 80M.
- Given the relatively high DRAM content of 4G phones, Zhang expects Micron (MU +1.3%) to benefit from the sales growth. Skyworks (SWKS -1.1%), meanwhile, is deemed well-positioned due to its high Chinese 4G power amplifier share; the higher RF content of 4G phones relative to 3G models also doesn't hurt.
- TrendForce recently forecast mobile DRAM, which tends to carry higher ASPs/margins than PC DRAM, would account for 40% of 2015 DRAM output, up from 2014's 36%. The firm also forecasts mobile demand and healthy pricing will lead industry DRAM sales to rise 16% next year to $54.1B.
- Chinese 4G phone demand was among the positives cited by Brean yesterday while hiking its targets for Skyworks rivals RF Micro and TriQuint. Strong iPhone production and healthy pricing/margins were among the others.
Nov. 24, 2014, 12:26 PM
- Citing stronger-than-expected DRAM demand, a $1B buyback, the Inotera JV's Q3 results, and a weak yen, Goldman's James Covello has hiked his Micron (MU +1.8%) target by $3 to $32, albeit while reiterating a Neutral.
- SanDisk (SNDK +1.9%), which receives a favorable mention in Covello's note, is also outperforming. As is chip equipment maker Lam Research (LRCX +2.8%), which has considerable DRAM/NAND exposure and has seen its target hiked by $6 to $91. The Nasdaq is up 0.7%.
- Covello: "We are now modeling about 1% DRAM undersupply in 2015 (from balanced prior) ... Our new content estimates for phones, tablets and servers are now all modestly above third party forecasts to better reflect this."
- Nonetheless, Covello remains more partial to SanDisk, due to a belief the DRAM industry's EBIT margins (among the highest in the chip industry) are unsustainable. "We expect excess returns to continue to attract supply (creating upside risk to our 2015 base case supply estimate of 25% yoy) ... DRAM capex is up about 40% yoy in 2014E and tracking higher in 2015E." Bulls are counting on industry consolidation to keep a lid on supply growth.
Nov. 18, 2014, 9:16 AM
Nov. 17, 2014, 10:25 AM
- David Einhorn's Greenlight Capital discloses it owned 30.5M Micron (MU -1.4%) shares at the end of Q3, down from 40.3M at the end of Q2. (13F filing)
- Likewise, Einhorn's stake in Marvell (MRVL -1.8%) fell to 26.4M shares from 39.6M at the end of Q2.
- Micron has had a nice run since Einhorn first disclosed a position a year ago. Einhorn has been long Marvell since 2011.
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