Market briefing---Matt (slow)
>> welcome back to “world financial report” with our fancy new music. i’m matt nesto. let’s recap the day that was on wall street. mixed markets dow and s&p down slightly and the nasdaq up .4%. checking on treasuries now, also a mixed market there. we saw some weakness creeping into the 10 and five-year notes. but mixed picture. little changed really on the shorter end of the curve after some comments from the fed bank in atlanta, president saying rates could stay too low for too long and that could cause problems. and we look at the currencies. there is the latest trades there. your dollar buying a little bit more yen. the euro and the pound both down verses the dollar. micron technology, the world’s second largest maker of computer memory chips narrows its second quarter loss t. idaho-based computer company says it lost four cents a share, beating the year-ago loss by a wide margin as you see there and the thompson estimates which were looking for a seven-cent loss. sales were up 26% to $991 million, falling short, though, of expectations there. analysts ty winn follows micron at susquehanna financial group and joins us from san francisco with his reaction to the earnings report. welcome, t ynches i’ll give you my reaction, ty. they migsdz on sales and they managed somewhere between the top line and the middle line to the bottom line to get the earnings better than expected. but sales, the top line rules all, does it not?
>> yes, it does. but i think the key point that we’ve seen is the average selling price remain flat quarter to quarter, which indicates to uses a very strong demand out there because it’s been a historically bad quarter for pricing. here we’re seeing the average selling price remain fairly flat, which is a solid indication.
>> if we take a look at the market reaction, the stock down an additional 40 cents from where it closed in regular trade today. the disappointment really no surprise. the magnitude we’ll have to see exactly. you see there that is today’s trades, little changed in regular trade. but down 40 cents further in extended hours. is that a reasonable reaction, given what the stock has done lately?
>> yeah. i mean, i think the market was expecting a stronger number than what the company reported. however, like the reason why we upgrade the stock is because we believe the second half of this year, the deram pricing should continue to trend upwards as the deram industry could get to be undersupplied in the second half of this year. and i think that the imbalance of the supply and demand should favor the pricing environment.
>> it is interesting. you know, in terms of valuations in your research, you say that micron stock has trades between five times and 50 times forward earnings, historically speaking. but historically speaking, they haven’t had any earnings. they have lost money 21 out of the last 30 quarters, like 7 1/2 years.
>> you bet. i mean, the de-ram market is definitely a difficult market . but then during the periods when pricing is going up we definitely favor a company like micron because i think during the environment, like what we’re seeing what’s happening right now, the company could be turning into profitability.
>> but, you know, the fact remains that the stock is up 90% in a year and they’re losing money. as i said, at leasts the last nine quarters.
>> but, again, i think the de-ram market is very speculative. the industry itself is expecting the de-ram pricing to continue to trend downwards. however, on upwards pricing environment, i think definitely would help the micron bottom line.
>> micron is―well, we could say a second or third-tier competitor in the electronic components, semiconductor business surpassed in terms of sales and market cap by intel, texas instruments, xilinks, and broadcom. why would i not want to buy one of those four companies larger and doing better than perhaps micron, which you just upgraded?
>> well, i mean, i think micron right now they are a diversified away from the de-ram market as well and they’re getting into the flash market and also into the sensing mearkts and i think they’re live ranning off the key technology that they have today, which ises the manufacturing and the efficiency of the manufacturing, using that and extending it to the consumer space. and it’s kind of hard to say like if they were willing to buy other companies at this time.
>> i have to say, though, the stock compared to the rest of technology over the last couple of week, three weeks or so, has held up remarkably well. why?
>> well, i think that there definitely is a lot of chatter out there saying that the de-ram pricing is improving and which we believe that to be the case as well. and that’ses a lot of indication out thereto that’s saying that the supply front could be slowing down, which again could help drive the de-ram pricing and, on the other hand, the demand is a lot better than expected and i think it’s driven by the consumer as well as the communication market and on the p.c. front, although it is seasonal, but on an average, the content for p.c. has been going up, just like about 360 megabytes today verses like 300 megabytes compared from a year ago and would believe it could be up to 450 megabytes by the end of this year. again, i think that would help drive the imbalance of the supply and demand of the d-ram.
>> our thanks to you. tai nguyen, an analyst with susquehanna. more data out tomorrow, thursday the weekly jobless claims as we always get and the latest peak on existing home sales. they are expect ed to show strevpk like the new housing numbers we got out today. richard dekaiser, chief analyst at national city, coming to us from cleveland with his spin on the economy. that is all coming up next.
