Wednesday, September 13, 2006

Calls of Note Part 4

- UBS has some VERY interesting comments on Micron (NYSE:MU).

Firm notes they spoke with Micron Investor Relations yesterday and came away incrementally
less enthusiastic than they had been previously on the name. Firm's concerns surround the company downplaying flexibility and opportunity in DRAM product areas where pricing continues along its considerable strengthening trend. The company also sounded incrementally less upbeat on NAND prospects given the exaggerated levels of pricing declines seen over the course of the year. While it is not new that NAND pricing has been under pressure, the firm would have thought Micron's new capacity coming online would have made for a more favorable assessment of pending quarter prospects rather than the downplaying they received. Micron noted that DRAM strengthening came too late to have any meaningful impact on August quarter results (no conference call date set yet), and there has been little room to grow bit output given resource allocation shifts. Looking forward to the November quarter, 5-10% bit growth in DRAM with 10% plus ASP appreciation seems achievable. Net, these comments are driving no change to their model at present, and the firm finds themselves wondering how long the market will be willing to wait for Micron to start realizing some of the better growth potential inherent in its end markets.

Notablecalls: Actionable note alert! I found these comments buried deep in a note commenting on AAPL's new products. I have been a MU bull for the past couple of months and these comments coming from co's IR departement strike me as VERY surprising. The stock has been very strong on expectations of a strong quarter. Now that will change. MU just became a short.

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