When you are struggling with the current circumstances, continuously trying to shrug off ongoing issues, and yet your efforts fall short, disappointment is inevitable.
The company has lost about 30% of its stock price since its March 2012 yearly peak, when MU traded as high as $9. Through the eyes of investors, this is probably not just disappointing but downright infuriating, as roughly $3 billion vanished into thin air over a few months.
MU is struggling with various factors, reflected in their reports. Average selling prices are going down across all product segments, costs of underutilized capacity are stacking. The latest 10-Q reflects a weakness in market demand and customers transitioning from NOR to NAND flash products.
The company is recording net losses that are growing at a steady but still unnerving pace over the last year. The most recent quarterly loss amounts to $320 million. Wall Street gurus are also predicting a negative development in the immediate future of the company with minus-sign estimates.
The company management changed in early Feb 2012 when previous CEO Steven Appleton passed away after a fatal plane crash. The board almost immediately appointed Mr. Mark Durcan as CEO, with Durcan previously holding the COO spot in the company. This alone is not alarming in any way but is brought into new light by the fact that Mr. Durcan had officially stated that he intended to leave the company and retire permanently, not just change his occupation.
A somewhat unsettling question arises – how motivated can a newly appointed CEO be when his intentions just a couple of weeks earlier were to permanently retire? The impact of the new executive on company performance in the following months can only be guessed at. All the same, following what looks like a brief period of accumulated momentum, MU stock started sliding in early April.
Recent news from Micron have been optimistic and if their new and expanded product lines of embedded memory and high-performance SSD systems pick up, things may change for the better.
To increase its chances of success, the company will have to strike a careful balance between its growing R&D expenses and its pricing and projected sales.
