The Dynamic Random Access Memory chips producer is going through a perfect storm scenario at the moment, as Micron Technology Inc. shares continue to plummet, making investors and traders fear that the company may be reaching a bottom by the first quarter of 2016.
Micron Technology has been in the business of manufacturing and distributing semiconductors since 1978. The semiconductors in question are DRAM and flash memory devices, as well as solid-state drives. Its products are commercialized under the brands Lexar and Crucial Technology. It has been ranking in 4th place in the top semiconductor sale leaders of the world, behind companies like Qualcomm, Samsung and Intel. The latter has been under a partnership with Micron in order to create NAND flash memory producers through the use of IM Flash Technologies.
Unfortunately, because of the lower than average chip prices, as well as a weak demand in chips used in PCs or other similar devices, Micro Tech. has been suffering from a steady decline since the start of 2015. Its shares have dropped by 5.9% in the last month, reaching $13.78 per share. This decline has been underrated by investors’ estimates which claimed that shares would rise by $0.22, with the total revenue reaching $3.46 billion in profits by the end of the first quarter in March 2016.
Estimates from the company were lower than those from investors, with share loss ranging from $0.05 to $0.12, while the total revenue was located between $2.9 billion and $3.2 billion. This surprised investors greatly, urging them to maintain a hold position in the stock market.
One of the reasons for this current predicament is the company’s present focus on developing 20 nm DRAM chips, as well as 3D NAND chips that are more cost efficient than its predecessors. This move comes with an added detriment towards current product production, making their market value drop considerably, aided by strong pricing headwinds.
Another reason stems from the recent purchase of Inotera Memories Inc. a Taiwanese chip manufacturer. This deal set back the Micron company an estimated $3.2 billion. This deal was criticized by stock market aficionados which claimed that the time chosen for this deal couldn’t have been worse. Currently, the entire PC DRAM segment of the market is suffering from a decline in pricing, not just Micron in particular.
When compared to last year, Micron Tech.’s net income suffered a massive blow, with a drop from $1 billion, or $0.84 per share, to $206 million, or $0.19 per share. This is extremely unfortunate, especially if you would take into account that the PC market shows no signs in stopping its decline in shipping. The impact of the Windows 10 launch was barely felt on this side of the market, with most users opting to simply upgrade their OS on their existing computers instead of buying a new PC.
Because Micron Technology Inc shares continue to plummet, a couple of large investors in said company have modified their share holdings considerably. The largest modification came from Saturna Capital which raised its share stake by 145.5% through the purchase of an additional 44.789 shares, bringing the total number to 75.897 shares, valued at $1.13 million. Only time will tell if Micron will manage to quell its current decline or not.