Micron Technology, Inc. (MU)

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.

Yes, the current state of the DRAM and NAND industry is less than stellar, however, much of the current state of affairs was self inflicted by an industry historically unable to collectively keep control of the supply of its products. As a result this industry more than any other technology industry is classically dominated by a boom/bust cycles. Recent signs suggest that the plummeting DRAM spot price has caused the industry to re-think its capacity expansion plans by reducing capacity growth and materially reducing the unprofitable 200mm capacity currently in place. With Vista creating increasing DRAM demand per PC we should begin to see firming spot pricing and a rapidly improving fundamental picture for DRAM producers, including MU.

fast money big decliner in tech

i've been a holder of OVTI for years, and just got tired of hearing how Micron is EATING THEIR LUNCH! figure, if you can't beat 'em...ultimately, feel like both OVTI and MU will prevail. kinda like betting on both horses in a two-horse race...

MU is at 52 wk. low; going forward it appears undervalued and is awaiting a catalyst to propel it higher. Earnings estimates are frequently all over the board and generally not analyzed very well.

You can't sell a commodity for less than what it costs you to make it. Company is burning thru its cash at the rate of about 100 million a month and it has a little over a billion left.

The entire market for memory chips is at the end of a life cycle right now. The new generation of bigger and faster chips is currently in development by Micron and others and is due out in the second half of 2008. This will cause prices to rise again as the next generation of memory chips enters it profit generating/sales phases.

Micron has tried to get itself positioned so it can survive a down time in memory. But, it will continue to go down the rest of 2008 due to losses adding up. Steve Appleton is a player and will have this one back in 09. I live in Boise, Idaho home of Micron and think it will once again be at the top, they have plans to build a new fab plant here in the next year or so.

This stock is a bloated pig with terrible management. Anyone who has extensively researched this company and in turn owns its stock is an idiot. Short term may play out well, but look for this company to fall apart before 2010.

is comming up

1. Continually dropping ASP's
2. Increased operational costs - capital investment for next generation memory chips (NAND flash)

Long term this is a strong company though - possible acquisition target for - Private Equity

Micron has diversified and their results are not so closely tied to commodity DRAM price shifts. They have invested heavily in new plants and equipment, and are positioned to benefit from those capital investments.

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.

Another gainer as hard disks die to be replaced by flash. Based on current constant (exponentially) falling prices of hard disks and flash, I make the crossover in 2013. So even before then, flash's other benefits (durability, reliability, random access speed, and possibly bandwidth speed) will also win it audiences.

There is a long-term trend in place driving up demand for NAND flash and DRAM products. New iPods, ultra-portable laptops, high-end cell phones, and embedded electronic devices all look poised to leverage these technologies like never before. Recent pricing pressures have led to a devaluation of this stock - and rightly so. However, the bears have gone too far, punishing a company excessively for a temporary trend completely outside its control, while management has been actively reducing overhead in the meantime.

I believe that Micron is set for a nice little run up to $16. 1. Only 1 month of the higher price of memory shows in last qrtr. 2. Cell phone memory was dropping end of qrt. according to conf. call. 3. Vista - requires 1 GB and really needs 2 GB to run effeciently. Lot of pent up demand waiting for the new OS and companies waiting to upgrade. Remember this may show more in 07 than 06. 4. The new partnership with Intel should show more signs of profit in the year as most of the costs have been paid. 5. Christmas season is here and retailers will need to replenish stocks after decent sales.

Downside - if Vista does not generate enough additional sales will MU be able to make up the difference elsewhere.

nice value right now short term should see some growth to $12

double bottom and up to stall at 10 and consolidate.

supercycle