Can Micron Hold On to Its Momentum?http://www.fool.com/investing/general/2013/03/27/can-micron-hold-on-to-its-momentum.aspx Richard Saintvilus
March 27, 2013
Shares of memory maker Micron (NASDAQ: MU) have been on a tear. Upon reaching $10.27 last week, the stock has essentially doubled after bottoming out at $5.16 on Oct. 24. With the stock now only percentage points away from a 52-week high, investors want assurances that Micron has enough ammo to support the recent optimism. I don't blame them.
Micron is known for its volatility. And it certainly doesn't help that the commodity memory industry, which has posted weak margins due to low average selling prices, or ASPs, has been shaky at best. But with names like SanDisk (NASDAQ: SNDK), Samsung and Applied Materials, there's also been a lot of value in this sector. And Micron certainly fits in that category. So, heading into the company's earnings results, there was a lot to prove. And Micron delivered.
Who and what is Micron today?
The company's flash memory business consists of NOR and NAND, non-volatile storage technologies that requires no power to retain data. Both work the same way, but are different in functionality. NAND, which is used in devices like MP3 players, is able to retain more storage, whereas NOR, which is used in mobile phones, is faster. Micron arguably perfected this market. But there have been plenty of struggles.
Not only has Micron lost market share to SanDisk and Samsung, but the declining PC industry and soft ASPs left investors no choice but to bail on the stock. So, the Street rejoiced that the strong performance was largely due to its flagship chips, NAND and DRAM (dynamic random access memory, the type often found in personal computers).
Is this the same management team?
Ordinarily, the soft ASP situation, while not new, would be cause for concern. But the Street didn't expect much price movement. Plus, it