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Outlook up for Nand and down for DRAM
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Wednesday, December 22, 2010
Investment banking firm Raymond James & Associates Inc. has upgraded SanDisk Corp., but the firm has also lowered its estimates for Micron Technology Inc.
Hans Mosesmann, an analyst with the firm, has lowered his estimates for Micron. ''we are lowering our sales estimates for F1Q11 and F2Q11 primarily to reflect a greater decline in core (PC) DRAM average selling price (ASP) assumptions, offset slightly by improved expectations for NAND in 2011. PC DRAM ASPs are expected to be down 43 percent sequentially in the November quarter verses our prior expectation of down 23 percent sequentially,'' Mosesmann said in a new report.
''Our November quarter sales and EPS estimates decrease to $2.2 billion and $0.30 from $2.4 billion and $0.41. For FY11, our sales and EPS estimates decrease to $9.2 billion and $1.24 from $9.5 billion and $1.35. For FY12, our sales estimate remains at $11.3 billion, but our EPS estimate increases to $2.33 from $2.25,'' he said.
''Discussions with PC OEMs suggest 1Q11 content of DRAM may grow double digits quarter-over-quarter due to existing lower ASPs, the emergence of 2 GB modules enabled by volume 2-Gbit chips, and the Intel Sandy Bridge launch in January,'' he said.
In addition, there are more indications that second-tier DRAM players are under duress as their fully-loaded costs are more than twice the current prices,'' he said. ''Given massive debt loads, we expect limited or no ability for these players to upgrade capacity in 2011 if there is a will to stay in the game.''
There is some good news. ''Tablets (NAND and specialty DRAM) are a significant opportunity for Micron,'' he added.
Micron will report November quarter earnings results on Dec. 22.
Mosesmann has upgraded his outlook for SanDisk. ''We are upgrading SanDisk to 'Outperform' from 'Market Perform' on the better than expected 2011 prospects for NAND flash solutions driven by tablets, smartphones, and solid state drives (SSDs) in general,'' he said in a separate report.
''Improving demand dynamics offset our previous concern of increasing supply driven by three new NAND fabs from Samsung, Toshiba, and Micron entering volume ramps in 2011, which are included in our 80-85 percent bit-supply growth assumption,'' he said.
Indeed, the NAND business remains hot. ''We enter 2011 with potentially good prospects in terms of NAND ASP stabilization and a significant O/S tablet launch in Google’s Honeycomb Android in roughly mid-1Q11,'' he said. ''Apple has set the stage for the mainstream adoption of flash memory used in SSD applications in our opinion, in which disk drive 'size' and 'price' are becoming secondary considerations verses 'form-factor' and 'performance' in notebooks.''
And tablet PCs are the talk of the town. ''We believe today’s conventional wisdom that 2011 tablet units of ~50 million could prove conservative,'' he added.
By: DocMemory
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