Tag Archives: intc

Micron Downgraded Amid ‘Overly Optimistic’ Views Before Earnings

A Samsung-driven memory glut will pressure Micron Technology ’s ( MU ) top line, an ITG analyst wrote Tuesday as he estimated 11.5% and 10.6% sequential pricing plunges for DRAM (dynamic random-access memory) and Nand memory in Q3. ITG’s Mark Bachman cut his Q3 expectations on Micron sales to $3.03 billion vs. his earlier model for $3.1 billion, in line with company guidance but below broad Wall Street forecasts. The consensus of 33 analysts polled by Thomson Reuters sees $3.05 billion in sales, down 27%, and an eight-cent per-share loss ex items vs. 81 cents earnings per share in the year-earlier quarter. Micron stock was down 1.7% in midday trading on the stock market today , a day ahead of the company’s scheduled Q2 earnings results. Needham and Credit Suisse analysts also cut expectations Tuesday on Micron. Earlier this week, a Nomura analyst reiterated a reduce rating, the equivalent of a sell rating, on Micron stock. Like Bachman, Nomura’s Romit Shah sees DRAM (dynamic random-access memory) prices down in Q2 . Bachman expects Micron to report Q2 results in line with guidance but “would not be surprised if Micron guided revenue lower than the current consensus.” DRAM and Nand (flash) pricing declined 7% and 2%, respectively, in March, he wrote. “Pricing continues to deteriorate from continued weakness in the PC and mobile end markets,” he wrote in a research report. And Micron’s shift to a mobile focus isn’t paying off. Mobile sales fell 13% year over year in Q1. DRAM Pricing Struggles DRAM sales comprise the lion’s share of Micron’s sales but are deteriorating faster than Nand sales, Bachman wrote. Year over year, DRAM sales fell 37% in Q1, vs. a 5% decline in Nand. Flash memory pricing is more elastic, he noted. “As Nand prices fall, storage consumers increasingly substitute mechanical hard drives with Nand-based solutions,” he wrote. “While the market for DRAM is expanding, it is not a substitute for a relatively inferior good.” Sequentially, DRAM sales prices fell 4%, 10%, 7% and 13% over the last four quarters, Needham analyst Rajvindra Gill wrote in a report. Gill downgraded Micron stock to underperform from a hold rating. Gill sees consensus expectations for a 12% jump in fiscal 2017 sales as “overly optimistic,” considering a forecast 19% decline in fiscal 2016. For 2016 and 2017, Gill expects DRAM pricing to fall 30% and 14%, respectively, vs. a 13% decline both years in Nand prices. Credit Suisse analyst John Pitzer models a 10% sequential decline in Q3 DRAM pricing vs. earlier forecasts for a 5% decline. Pitzer rates Micron stock outperform and has a 20 price target. Pitzer expects a recovery in August and November on normal seasonality, cost reductions on Micron’s 20-nanometer ramp, the consolidation of Inotera, and optionality with 3D Nand and 3D X-Point in conjunction with Intel ( INTC ). Gill, on the other hand, says that Samsung’s tech is too far ahead for Micron to catch. “We believe Samsung remains well ahead and that by the time Micron has enough capacity on 3D to realize cost/bit benefit, Samsung will already have the ability to drive pricing down and largely negate Micron’s profitability progress,” he wrote.

Could Intel Undercut Apple Supplier Qualcomm In iPhone 7?

Intel ‘s ( INTC ) dogged mobile pursuit — to the tune of “billions of dollars” lost — will pay off with an Apple ( AAPL ) iPhone 7 modem chip, a Barclays analyst wrote Monday as he downgraded modem rival  Qualcomm ( QCOM ). Radio-frequency systems supplier Qorvo ( QRVO ) wins in the Intel model, scooping rival Skyworks Solutions ( SWKS ), Barclays analyst Blayne Curtis wrote in a research report. But Intel’s Apple iPhone share will likely be a minority, with 10%-20%, as a second source. The No. 1 chipmaker  Intel hasn’t been used in an iPhone since the 2008 3G iteration. Apple last dual-sourced a key component — the processor — in the iPhone 6S, pitting Taiwan Semiconductor Manufacturing ( TSM ) against Samsung. Samsung has since backed off the A10 processor, yielding to Taiwan Semiconductor, analysts say. Midday on the stock market today , Qualcomm stock was down more than 1.5%, while shares of Intel and Apple were little changed. Skyworks stock was up 0.8%, while Qorvo stock was down 0.4%. Figuring on 20% share of the iPhone 7, Intel would add 3 cents earnings per share ex items per quarter vs. a 13-cent Qualcomm decline, Curtis wrote. Curtis downgraded Qualcomm stock to equal weight from sector weight and cut his price target to 50 from 55. “We clearly underestimated Intel’s ability to lose billions of dollars in this pursuit of mobile, but we also thought Qualcomm would make a larger effort to monetize the modem business it still has,” Curtis wrote. Qualcomm likely won’t be able to innovate back to 100% share of the iPhone modem business, Curtis wrote. Its faster modem, the Snapdragon 820, comes with a lower average sales price and higher costs. “If Qualcomm can’t fix that problem, then this would be bad business for both companies unfortunately,” Curtis wrote. On the radio-frequency side, Qorvo wins in the Intel model, gaining 3% share vs. its iPhone 6S offerings, he wrote. In an 80%/20% Qualcomm-Intel split, Qorvo gets a pair of power amplifiers and the envelope tracking chip, undercutting Skyworks. Curtis forecasts Qorvo’s iPhone 7 share to rise 3% to $4.92 vs. $4.80 in the iPhone 6S. He boosted his price target on Qorvo stock to 50 from 46. But even at 50% penetration for Intel, which he calls unlikely, Skyworks still gains share, Curtis wrote. At the 80%/20% split, he expects Skyworks’ iPhone 7 chip content to rise as much as 20% to $6.82 per phone, up from $5.69 in the 6s. Curtis sees Broadcom ‘s ( AVGO ) contribution growing 27% in the iPhone 7 to $8.05 worth of content, vs. $6.35 in iPhone 6S. A three-year supply agreement between Broadcom and Apple will likely leave Qorvo, Skyworks and Japan’s Murata Manufacturing scrambling for share, he wrote.

Micron Expected To Unveil Q2 Loss Amid Samsung-Driven Memory Glut

Samsung and SK Hynix’s relentless mobile DRAM push is slamming American rival Micron Technology ( MU ), which is expected to report a fiscal-second-quarter loss Wednesday for the first time in three years. A Nomura analyst reiterated his reduce rating — equivalent to a sell rating — and 8 price target Thursday on Micron stock. Micron stock fell 1.4% Thursday, to 10.50. Shares crashed 60% over 2015, and they are down another 26% year to date. The consensus of 33 analysts polled by Thomson Reuters for Micron’s fiscal Q2 results, slated for Wednesday afternoon, models $3.05 billion in sales, down 27%, and an 8-cent per-share loss ex items vs. 81 cents earnings per share in the year-earlier quarter. Three months ago, Micron guided to $2.9 billion to $3.2 billion and a loss of 5-12 cents per share ex items. Nomura’s Romit Shah expects Micron to issue Q3 guidance below the consensus model for the sixth consecutive quarter. For Q3, the consensus projects $3.2 billion in sales and 5 cents EPS minus items, down 17% and 91%, respectively. The DRAM (dynamic random-access memory) market “hit a downturn in 2015” amid weakening PC sales and a Samsung-driven oversupply. DRAM sales contracted by 2.4% for the year vs. 32% growth in 2014, Gartner analyst Viveca Woods wrote in a January report. Micron leads the American DRAM market, rivaling South Korean competitors Samsung and SK Hynix. The waning PC market — also slugging No. 1 chipmaker Intel ( INTC ) — forced Micron to shift gears, taking a mobile-centric approach. But mobile might not be Micron’s saving grace. In Q1, Micron posted a 13% year-over-year decline in mobile sales to $834 million. So, even if the DRAM in smartphones is increasing, it doesn’t mean Micron will seize the biggest chunk of that market. As DRAM oversupplies the market, pricing will remain competitive for another one to two months, Shah wrote. Then, prices will likely topple as DRAM-makers try to undercut one another. “Until supply cuts transpire (with Samsung being the key), the market will remain vastly oversupplied as average sales-price erosion is setting up to be greater in 2016,” he wrote in a research report. Like Samsung and SK Hynix, Micron is prepping for better technology with its 20-nanometer ramp. But Micron’s pace of cost declines, dependent on that ramp, won’t be sufficient to offset the pricing plunge, Shah wrote.