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Nomura Securities Maintains a 'Neutral' on Micron Technology (MU); Preferred Choice for Elpida

May 7, 2012 11:16 AM EDT Send to a Friend
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Price: $31.66 -2.88%

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Nomura Securities maintains a 'Neutral' on Micron Technology (NASDAQ: MU) price target of $8.00.

Analyst Sidney Ho, said, "According to local media reports (eg, Nikkei May 6) in Japan, Elpida is likely to choose Micron as the preferred bidder. Elpida and Micron are expected to finalize the deal this month and submit a restructuring plan to the courts by August. Under Micron’s proposal, Elpida’s current production will be maintained, with no job cuts expected...The reported bid by Micron is 200bn yen (about US$2.5bn), in addition to the assumption of Elpida’s capital investment of at least 40bn yen per year."

"The deal makes sense and fits Micron’s strategy of buying cheap capacity. That said, if Elpida’s production level is unchanged after the deal, then it does not benefit the DRAM industry as much as we hope. It is possible that Micron will switch the product mix in the Elpida fabs in favor of mobile and graphic DRAM...We continue to believe the DRAM market will recover from 1Q12, with a U-shaped trajectory."

For an analyst ratings summary and ratings history on Micron Technology click here. For more ratings news on Micron Technology click here.

Shares of Micron Technology closed at $6.55 yesterday.




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