Semiconductor major Micron Technology (MU) has recently confirmed that it has settled a lawsuit with software giant Oracle Corporation (ORCL).
As per the lawsuit, Oracle accused Micron of artificially increasing the DRAM prices and violating the state’s antitrust and unfair competition laws based on the conduct of the company, extending from August 1, 1998, til June 15, 2002.
The IT major claimed several damages and has also agreed upon the restitution of attorneys’ fees, costs and injunctive relief. As per the settlement, both the parties have agreed upon withdrawing the litigations against one another.
This settlement is expected to affect Micron’s second quarter 2012 results, and may result in lower revenues and an increase in the net loss attributable to Micron shareholders of $58.0 million as compared to the figure reported in March 22, 2012.
The legal settlement is expected to keep Micron’s reputation unscathed, although may result in some monetary loss to the company. This may in turn add to the disappointing second quarter result and may widen the loss per share compared with our estimates. The quarter’s revenue also came in below the year-ago level. The quarter even saw a decline in ASP.
The cost-cutting measure could mitigate the adverse effect of ASP decline to some extent, going forward. Additionally, the drop in demand for laptops and desktop PCs may affect the demand for DRAM and RAM to a certain extent.
On the other hand, we believe that it won’t be easy for Micron to capture market share from SanDisk Corp. (SNDK), as SanDisk is a key player in the NAND space. However, the renewal in operation in Thailand may help the company going forward.
Micron Technology has a Zacks #3 Rank, implying a short-term Hold rating.
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