Micron Technology, Inc. (MU)

Micron Tech (MU) has the newest tech ... larger chipsets that operate at lower voltages, generating less heat that needs to be dissapated. These chipsets have passed Intel's testing and you can detect the effect in new product descriptions ( like those of HPQ ) that clearly tout the features and benefits.

When we want a new toy ... we scan the ads and the net for the best deal. The market is no different ... every "down" day is a buying oportunity. Today MU is "On Sale" and by next June when MU is $13 - $15 .... you'll be grinning all the way to the bank!

I noticed that Micron Tech has come up in the last few months, it was teetering on the edge and has shown how great it is.

market shortage of product

Will outperform coming out of the recession.

Long term appreciation as solid product line generates increased sales in improving economy.

MU aka Micron Technology, Inc. is already going strong & with the emerging markets recovering & growing this stock is a must buy & hold 3/5 years. all stat sheets look great!!!!

Strong tech company that's been around a while. With inventory levels finally dropping, prices are coming back up and MU should be well positioned to profit nicely.

Micron is a good company in a very difficult business. Both DRAM and NAND are commoditized and for every two or three years of down market there are only twelve to eighteen months of good times. Companies, often backed by their government, expand irrationally when times are good and insure suffering for everyone when supply races past demand. Taiwan and Korea in particular have a large enough percentage of their economies dependent on semiconductor memory that they prop up their companies during the bad times with loans that no sane bank would give. If you've been following this sector none of this is news. You also know that the sector was already in a downturn when the bottom really fell out of the economy. In fact, the memory downturn began during the latter half of 2006 and has grown (shrunk?) into the worst in the history of the business. That is saying something because this is a business that has had some awfully bad downturns. The one in 1985 was the previous record-holder. That one even chased out a little company named Intel, who got their start when they successfully commercialized DRAM in the early 70s. The Japanese came in a decade later and ruined the business for them. Ten years after that the Koreans did the same thing to the Japanese. Now the Taiwanese have done the same thing to the Koreans. All the while Micron has risen and fallen with DRAM prices. Enough with the history lesson.

While during the good times they say it will always be good and this time it's different, the converse is often said during times like now. The prices will never recover, companies won't make money again, etc. These views have one thing in common; they have both always been wrong. Both DRAM and NAND are in their third year of a truly epic downturn, a combination of overbuilding and crashing demand from the global economic meltdown. All of the losses have caused every player to reduce capacity. Hynix is out of the 200mm NAND business, Micron shut down their 200mm Boise fab, and Qimonda went bankrupt in January. In Taiwan ProMOS is teetering on the brink of insolvency and the rest of the players there are running their fabs at low utilization rates to conserve cash. A couple of these companies have announced quarterly losses equal to or in excess of revenue. Quite a business, eh?

Well, what goes down, if history is any indicator, will come back up. All of the manufacturing capacity coming off line and lack of capital spending will combine at some point with recovering demand to create a perfect storm of price recovery for these commodity chips. Micron has been very effective over the past three years in reducing both its COGS and overhead. Unfortunately, the prices have dropped even faster. When they do come back this company is in very good shape to benefit greatly. I think there will be a twelve month period in the next upturn where the company will earn in excess of $2B in total, and pay no income taxes on those earnings thanks to the years of losses. No, this does not make for a good business model, but the Market will still respond well to those earnings (at least $2.40 per share including dilution from the recent offering). Pricing earnings in such a cyclical business isn't something I can claim to be adept at, but based on the multiples Micron has traded at during previous upturns, I think the stock will peak at $35-45 a share in the next upturn. I guess this will take place if the economy recovers in the second half of this year with the high water mark coming in mid to late 2010. When the profits are tumbling back into this brutal business and everyone is announcing the construction of new fabs, sell your shares. Heck, take some of your profits and short the sector into the next downturn. This strategy may be the only good model for this business.

its got upside

Hometown hero!

The market rebound for the beginning of the year and administration change has caught this bear and turned it into a bull temporarily. Look for an upside swing to occur the first part of January. Be more careful for the last half of the month though.

With supply and demand as is, run up to summer months should prove profitable for the investor.

A solid stock, one to bull for 6 months or keep for several years at least.

I believe they will be able turn this around, I believe they are undervalued by about $6/share. I also believe that Hynix will not be supported as they have in the past by the Korean government.

Memory is going into everything. Big deal is energy savings in solid state HD for laptops.

Lexar (who is owned by Micron) is in development of some big time media storage devices. These will impact the technology just in time to be boosted by a rising economy.

DDR3 is coming.

Layoffs are actually signs of the company cutting costs in a shrinking economy. They are actually doing the right thing. Plus, after every acquisition there are always layoffs. Some signs their management knows what they are doing.

Regarding lawsuits, Rambus, like PCI and PCI-SIG, is an IP holder/owner and apparently not a very good one. In many ways, their sole purpose is to enforce their standards and defend their patents. I would almost consider it more a law firm than a team of engineers. It's nice having standards and in some cases justified. However, sometimes those enforcing standards can become a little too greedy and abusive to manufacturers. I'm not sure I would necessarily call it patent trolling, but they are definitely claiming damages on DDR-SDRAM and related memory controller patents in a very aggressive manor. Companies are not going to want to work with them out of fear of being sued. I would be less excited about owning stock in Rambus. Here is a good even keel article regarding the case:

http://www.idahostatesman.com/103/story/281880.html

Granted, I'm no patent lawyer, so please take these references with a grain of salt. Keep in mind, Rambus doesn't even own the original patents for DRAM, SDRAM, or DDR:

DRAM - http://www.google.com/patents?id=XDwSAAAAEBAJ
SDRAM - http://www.google.com/patents?id=kR4GAAAAEBAJ
SDRAM - http://www.google.com/patents?id=rZolAAAAEBAJ
DDR - http://www.google.com/patents?id=j1YGAAAAEBAJ

They just own memory controller patents that interface with the RAM and this specific design of SDRAM known to some as 'Rambus' SDRAM:

http://www.google.com/patents?id=gocSAAAAEBAJ

MU wasn't the only target in this case. Rambus also sued Samsung, Infineon Technologies, Hynix, Nanya Technology, Inotera Memories, and recently NVidia. Even the FTC is in a legal battle with Rambus. MU will definitely have to pay the piper, but I suspect it will be no more than 200 million judging by previous outcomes with other companies.

No one company should be able to monopolize DRAM technology. Especially when they didn't invent the technology themselves. They are just standing on the shoulders of giants like the defendants. I suspect Rambus potentially shot themselves in the foot and the companies mentioned above are going to migrate to newer technologies, avoid working with them, and dissuade from using this 'Rambus' technology altogether.

I predict Rambus will have a short rally and then plummet in the long run. RDRAM was too expensive and didn't catch on. XDR is just a successor of it. GDDR has since replaced XDR in the market. XDR is only currently being used in the PS3 and we all know the PS3 got slaughtered by Nintendo and XBox. Qimonda, the manufacturer for the XDR manufacturer for PS3 just got bought by Micron! The company Rambus has repeatedly attacked! Hmm, I wonder what all the MU layoffs are really for?

MU has a good spread in the market across many industries: Automotive, Computing,Commercial & Industrial,Consumer Electronics,Networking & Communications,Mobile,Server. They have a good business model and partner with many others to keep a strong footing in the industry. MU will tough out the economy and Rambus issues. I expect them to stay below the S&P for a few months and then turn around.

Management thinking long term. At current levels you will make money with a 5-7 year time frame.

we'll see ... I typically hate tech stocks ... but what the hell ...