Boston, MA 02/05/2014 (wallstreetpr) – Investors and analysts are always on the lookout for the next big idea; an idea that will carry them over a period of time. Looking at the performance of memory chip maker Micron Technology Inc (NASDAQ:MU) over the past one year, can we expect it to deliver the same results?
The Last Quarter:
Micron Technology Inc (NASDAQ:MU) ended the last quarter with $4.04 billion in revenues and a gross profit of $1.28 billion. The net income was $358 million. The fiscal year 2013 saw Micron record $9.07 as revenues, an increase of 1% over the previous year. Gross profit of $1.85 billion was more than 90% increase over 2012. There were two main and in a way interconnected factors responsible for such a strong performance. The first was the acquisition of ailing chipmaker Elpida. And the second was the favorable demand supply position in DRAM chips. The chip market is highly cyclical. The last cycle ensured that many companies set up shop and this lead to oversupply. Coupled with this demand from the PC segment fell as the segment went into a degrowth phase. Oversupply lead to reduction in the net price realization for all chipmakers. Companies could not withstand this and like Elpida, started to fold up. Micron was quick on the foot and lapped up Elpida. Consolidation and closures lead to a tight supply. Another contributing factory was a fire at a big manufacturer, Hynix. Falling sales of PCs were compensated by increase in demand for smartphones and tablets. Elpida had a strong hold in this market segment. Prices rose and Micron was able to take full advantage.
Too Good To Last:
Obviously, this position is too good to last. The fire was an unfortunate event and Hynix is working to restore the plant to full capacity. It will also try to capture the lost opportunity. The demand supply position is bound to stabilize in the future. And, in this condition, the real importance of Elpida will stand out. Micron Technology Inc (NASDAQ:MU) was able to turn the acquisition into a winning combination by the fast response time. And, this will give lasting results.
Whether it continues to deliver results remains to be seen.
