Just before Christmas, chip maker, Micron Technology (MU) reported a fiscal first-quarter profit of $204 million, or 23 cents a share, compared with a loss of $718 million, or 93 cents a share, for the year-earlier period. Revenue was $1.7 billion (compared with analyst expectations of $1.6 billion), up from $1.4 billion for the same quarter the previous year.Micron said revenue from its DRAM products rose 50% from the previous quarter, while sales of NAND Flash products rose 21%, due to higher sales volumes and improving prices.
DRAM (Dynamic random access memory (DRAM)) chips are found in personal computers, while NAND (a type of Flash memory) processors are used in such devices as digital cameras and mp3 music players.
In 2008 and 2009, Memory Chip prices fell through the floor as consumption dropped and inventory levels soared. However, the outlook for 2010 is far more optimistic as corporate IT budgets may finally start to be unfrozen and consumers buy into new PC kit driven by the launch of Windows 7. A reduction in inventory levels gives the potential for substantial chip price upside if consumption growth comes to fruition as the global economic recovery gathers pace in 2010.
A position in Micron was closed yesterday at $10.8 following an entry at $10. Further opportunities to trade long will be exploited on any market weakness, especially if the stock trades below $10.
