It's Time For Micron To Consider More Options (MU)

As Micron Technology Inc. (NYSE: MU) has briefly breached its 52-week low again today, this company needs some serious pressure put on it.  The DRAM giant briefly saw its share price hit $5.43 today, and that was under its $5.47 lows over the last year.  The only good news is that shares have recovered slightly back above the 52-week low.

What is interesting here is that this turnaround just won’t turn.  A bear market and tech spending slowdown is something that many CEO’s cannot get around that easily.  But for the last eight or nine months this went from being merely a range-bound stock to a poor performer.  Part of the issue here is the space. 

How would you like to be a DRAM maker or even a Flash maker right now.  This is a commodity stock now, with the only difference being that DRAM prices never trend upwards and stay that way.  There are just too many manufacturers in the space.  Here were two analyst takes on Micron back when the stock was more than $1.00 higher just last month.

We have called this a turnaround that just wouldn’t turn around before, and their situation is going from bad to worse to dismal.  If memory serves correctly, it was looking for a long-term plan in the turnaround.  Micron needs to look at its financial books, start comparing its assets and liabilities, and start looking at its share price and market cap.  If it is thinking about trying to do any more acquisitions, it should think again.

If the company waits for the long-term plans to come into play it may burn through too much cash and put itself at further risk on an ongoing basis.  It sure looks like it’s time to do a one-time dividend this year while taxes are low, review some of those units that could be sold off, and maybe even start trying to find buyers for some plants and land.  We have seen rumors and reports on this before, but they may have been based on hope more than on meat.  That isn’t going to do anything for shareholders who are long and wrong from $10.00 or $15.00, but it may at least stabilize this DRAM version of the Bataan Death March.

Unless these DRAM firms and Flash memory firms figure out a way to stabilize chip prices then it’s a wonder why anyone would want to stay in that business or get into that business.

Jon C. Ogg
March 26, 2008

Jon Ogg produces the Special Situation Investing Newsletter and can be reached at [email protected]; he does not own securities in the companies he covers.