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Stock Analyst Update

Outlook for Micron (and Memory Chip Industry) Is Still Favorable

Chip maker reports earnings much higher than expectations.

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Micron Technology’s (MU) fiscal third-quarter results were strong, with earnings exceeding expectations by 20% before one-time gains. But the bigger story for Micron is still the favorable prospects for the memory market in the second half of 2000.

For several quarters now, the outlook for Micron has been largely centered on the expectation that a significant shortage in the market for computer memory is inevitable in the near future. Not only has sales growth of personal computers chugged along at a fairly decent clip in recent quarters, but the amount of memory required for each computer has also been rapidly rising as well. The combination of these two factors, along with increased memory-chip usage in communications equipment, has created a demand environment favorable for companies that supply DRAM (dynamic random access memory) chips.

Jeremy Lopez does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.