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Analysts see silver lining in Micron earnings

Despite missing estimates in its first quarter, Micron Technology still looks good in the long term according to a host of analysts.

After market close Wednesday, the memory chip vendor reported fiscal first quarter net income of $352 million, or 58 cents per share, missing First Call's estimates by 2 cents a share. Shares of the memory chip vendor rose 1.13 to 30.94 in trading Thursday.

While the company's rating was cut at Gerard Klauer Mattison, the general consensus at Bear Stearns, Merill Lynch and Berstein, among others, is that the company's future outlook appears to be sound compared to its peers.

At Bear Stearns, analyst Charles F. Boucher maintained his long-term "buy" rating on the stock, noting that he thinks the stock is near a bottom. He also reiterated his price target of $70 but trimmed estimates for the upcoming quarter and fiscal year 2001 and 2002 to reflect current market conditions.

In a research note, the analyst said that he believes the February quarter could be the bottom for DRAM prices and for Micron earnings and sees some recovery in the PC market in the new year. "When this happens, Micron should enjoy stronger sequential bit growth, and some improvement in pricing," Boucher wrote in his research note.

Joseph Osha at Merrill Lynch also had a bullish long term outlook for the company. The analyst reiterated his intermediate-term buy rating and price target of $70, but trimmed earnings estimates for 2001.

In his research note, Osha wrote that he feels the pricing crisis in DRAM will not be sustained. The analyst fingered Micron as an excellent investment opportunity during the next 12months, on account of the company’s leadership position in the sector.

At Chase H&Q, Sudeep Balain maintained a "market perform" rating on the stock, but cut revenue and earinings numbers for the upcoming quarter. Balain raised revenue and earnings estimates for fiscal 2001 to reflect a strengthening PC and memory market. The analyst was cautious on the stock due to the company's lack of short-term visibility in the PC marketplace.

Analyst Vadim Zlotnikov at Bernstein Securities saw Micron as an attractive stock in expectation of gradual DRAM market recovery, despite a weak PC sector, on account of the company's ability to weather the low pricing storm.

Other analysts were not as positive. The stock was cut to "outperform" form "buy" at Gerard Klauer Mattision.

SG Cowen Securities analyst Rick Billy cut his estimates on the company for fiscal 2001.

"We continue to rate the shares "buy" and look for an opportunity to upgrade. The next move up must await definite signs of a rebound in DRAM ASP. No such signs exist now," he added.

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