Micron Technology (NASDAQ: MU)
Micron investors have reasons to worry when trading opens on Tuesday morning after the Financial Times reported that Chinese authorities have found “massive evidence” linking the chip maker along with SK Hynix, Inc. and Samsung Electronics Co. Ltd to anti-competitive behavior.
The probe began after smartphone makers in China raised concerns about rising prices and supply shortages for DRAM memory chips.
The news is likely to add more pressure on Micron stock, which tumbled 6.6% by the end of trading Monday. On Friday, the Idaho-based company lost 1.18% and 25.4 million shares were traded after Nvidia Corp. posted disappointing guidance and revenue outlook for the current quarter, blaming “crypto hangover.”
Some Wall Street analysts are not ruling out the possibility that the ongoing Sino-U.S. trade disagreements may have provoked Chinese officials, thus forcing them to investigate the firms as a way of retaliating against the Trump administration. For now, we can’t just conclude that though it’s easy to predict that shares of Micron will take a bath if the investigation ramps up.
The three companies cater for more than 95% of DRAM memory chip demand in the world. Micron will announce its fiscal first quarter earnings on Tuesday, Dec. 18, 2018. On Monday, Romit Shah, an analyst at Nomura Instinet slashed his price target on shares of the company from 65 to 50, but reiterated his buy rating.
Shah said, “We believe estimates are too high for the current quarter and fiscal 2019 due to weaker DRAM fundamentals. Much of the weakness appears already priced into the stock. DRAM pricing is tracking down 10% in the December quarter. It likely will decline 15% in the calendar first quarter.”
Shares of Micron were down $2.11, or 5.73% to $34.72 in Tuesday premarket trading. The stock has lost more than 10% since the beginning of the year through Monday.
Micron Technology Company Profile
Micron Technology, Inc. engages in the provision of innovative memory and storage solutions. It operates through the following segments: Compute and Networking Business Unit (CNBU); Mobile Business Unit (MBU); Storage Business Unit (SBU); and Embedded Business Unit (EBU).
The Compute and Networking Business Unit segment includes memory products sold into cloud server, enterprise, client, graphics, and networking markets.
The Mobile Business Unit segment offers memory products sold into smartphone, and other mobile-device markets. The Storage Business Unit segment comprises of SSDs and component-level solutions sold into enterprise and cloud, client, and consumer solid-state drive (SSD) markets, other discrete storage products sold in component and wafer forms to the removable storage markets, and sales of 3D XPoint memory.
The Embedded Business Unit segment consists of memory and storage products sold into automotive, industrial, and consumer markets. The company was founded by Ward D. Parkinson, Joseph L. Parkinson, Dennis Wilson, and Doug Pitman in October 1978 and is headquartered in Boise, ID. – CNN Money
