SAN JOSE, Calif. Concerns about the memory market prompted investment banking firm Lehman Brothers on Thursday (Sept. 30) to lower its quarterly forecast for Micron Technology Inc.
Despite showing positive sales and profit growth, Micron (Boise, Ida.) on Wednesday (Sept. 29) missed Wall Street's expectations for its fourth fiscal quarter amid slumping memory prices (see Sept. 29 story).
Ted Parmigiani, an analyst with Lehman Brothers in San Francisco, in a report was upbeat about Micron's quarterly results, but noted the company missed Wall Street's estimates, due to a 5 percent decline in terms of average selling prices (ASPs) and lower-than-expected gross margins.
Based on Micron's conference call on Wednesday, Lehman Brothers also lowered its FQ1:05 revenue and EPS estimates by $109 million and $0.09, respectively, to $1.31 billion and $0.25 per share. The investment banking firm also reduced its 2005 revenue and EPS estimates by $316 million and $0.16, respectively, to $5.33 billion and $1.22.
"Management noted that ASPs are already slightly positive quarter-to-date and that the company's current forecast includes bit production growth in the low double digits," Parmigiani said.
"While we are resetting our model to reflect more conservative assumptions with respect to revenue growth and gross margin expansion, we believe Micron's profit recovery driven by the combination of favorable DRAM supply/demand, ongoing cost reductions, and strategic diversification into non-DRAM product
lines is intact," he said.