Micron Technology (MU) is slated to report earnings after the close of trading today (Wednesday).
Christine Short of Estimize spoke with Yahoo Finance Senior Columnist Michael Santoli about a series of challenges facing the chipmaker, not the least of which is the strengthening U.S. dollar (UUP).
While Short acknowledges that the stronger dollar is impacting every multinational company, she believes it is “going to particularly impact Micron, and they haven’t been great at hedging against currency headwinds in the past, specifically the Japanese yen.”
But the troubles don’t end there. Micron is also facing increasing competition in the memory chip space, specifically from SanDisk (SNDK) and Samsung.
As if the dollar and rising competition weren’t enough, Micron must also face the bleak reality of what Short calls a free fall in the PC market. “They get a lot of their revenues based on PC sales,” says Short. “The guidance out there hasn’t been too great for some of their competitors, mainly Intel (INTC) just a couple [of] weeks ago cutting guidance by $1 billion dollars, so revenues are down $1 billion because of weakness in the PC market.”
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Micron had been one of the hottest stocks in recent years, until things started to cool off in the middle of last year. Now, Short says it is time for the company to figure something else out, thanks to the slumping PC market. The company’s memory chip businesses – both NAND and DRAM – are both heavily tied to the PC market, and Short says that’s a problem the company is going to have to address.
“Micron’s really going to have to find another niche to carve out… They’re really going to have to look into some other pockets and maybe follow a different path to make up for some of those lost revenues.”
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