After a $286 million loss in fiscal 2013 second quarter report, micron technology company (nasdaq stock code: MU) shares rose more than 10%. The reaction from the market let people doubt that what had happened, is the company's title. Let's dig deeper into the light, and find out its potential returns.
financial
Though quarterly revenue growth of 3.4% year-on-year, revenue grew 13.3%, compared with the previous quarter. Sales jumped 38%, the performance is a direct result of DRAM products.
In the last few quarters of losses per share almost remain the same. These Numbers are pointing to a meguiar's face a big problem. Memory products average selling prices fell much faster than any costs down. In addition, the New Deal also increased uncertainty of loss.
The percent change in average selling prices
years
Dram
Trade NAND flash memory *
2011-2012
- 45%
- 55%
2010-2011
- 39%
- 12%
From 2009 to 1010
28%
26%
2008-2009
- 52%
- 52%
2007-2008
- 51%
- 68%
* trade NAND Flash memory does not include sales of Intel's IM Flash.
The challenge for
In the semiconductor industry's future depends on innovation. Current semiconductor memory technology, such as DRAM and NAND Flash and NOR Flash, is facing a severe disadvantage, because of high cost, the price is lower, high power consumption and large size.
In order to address these challenges, micron technology company is need a good balance strategy, can solve the key problem, in multiple ways:
The development
- development of new technology to meet the market demand
- achieve cost efficiency, reduce the loss
- maintain a high market demand of success
- balance of income and investment to boost economic growth
- requires a lot of capital investment, with modern production facilities
Sales and operations
By more than half, or 85%, micron technology company of its revenue from international customers. In addition, a large number of manufacturing unit is located outside the United States some issues need to be aware of are:
- no, stable level of demand
- political and economic instability
- the foreign government's economic policy changes
- high volatility in the import and export duties
- cultural and language differences.
Race scenario
The semiconductor industry has a strong competitive power, and the dominant big players. Micron technology companies face fierce competition, like the SanDisk corporation (NASDAQ: SNDK). New competitors, such as Seagate technology, inc. (NASDAQ: STX), and a strong focus on diversification, and the introduction of new and innovative products, meguiar's survival pose a serious challenge.
SanDisk shares almost doubled since 2010, and in the next few years, the earnings per share are expected to grow by more than 10%. Have higher operating margin of 13.8%, and the industry average of 12%, the company's market capitalization of about $1.34 billion. Analysts watch company, and look forward to great return in the near future.
In addition, the SanDisk company spent a lot of innovation, and regularly launch new products, such as iNAND extreme inspired by modern technology of the embedded flash drive. These findings make a SanDisk will buy the stock.
In and of itself, Seagate launched the third generation of solid hybrid drive system, and put it in direct competition with micron technology co. Though the company has produced a good quarter, analysts believe the outlook of the future is very bright.
Seagate's revenue comes from hard disk drive is an important part of business. Markets, however, has turned to solid-state drives, and hard disk drives demand, is expected. Diversification of the company is in deep pressing needs, so as to avoid rubbing, investment outlook is not optimistic.
What expectation
Micron technology companies have succeeded in creating a complete product portfolio of semiconductor memory. The company spends a large part of its revenues in R&D, and has a good positioning itself, in order to meet the competition strategy of joint ventures and acquisitions. The second quarter of fiscal 2013 revenue exceeded Wall Street analysts' expectations.
Micron technology companies are faced with multiple layers of key problem. , however, the company showed over the past three years the average income of more than 19% of the industry average growth rate of 11%. Analysts expect average EPS growth rate of more than 14% in the next few years.
These results indicate that the company has great potential, recovered from losses, and generate high returns on investment in the short term and long term. This makes meguiar will buy stocks.
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