Tomahawk, WI 7/29/2013 (Basicsmedia) – Micron Technology Inc. (NASDAQ:MU) shares fell 5.27% Friday to close at $12.59 after Digi Times cited industry sources and reported that the demand for NAND flash memory drives will be much weaker than expected in 3Q2013. Digi Times pointed out that the previous assumptions on strong demand for smartphones had led to expectations about possible shortages in supply of NAND flash memory in 2Q2013. However, the lesser than anticipated sales of smartphones, especially the high-end smartphone in that quarter has dampened the enthusiasm about the demand for NAND flash memory in the coming months. Further, markets are also concerned about the downward price pressures in 4Q2014 due to higher production capacities.

SanDisk Corp (NASDAQ:SNDK), another data storage company, also took a beating on Friday, losing 5.85% to end at $57.00. The company had reported on July 18, 2013 that its sales rose 43% in the last one year and its stock had gained in the previous week. However, this week it has not been faring well and the report by Digi Times has impacted SanDisk as much as it has affected Micron on Friday.

Micron had released its 2Q2013 financial results on June 19, 2013, beating market expectations on both revenues and earnings per share. The stock gained considerably after that and it hit a new high of $14.34 on June 27, 2013, the highest in the last 52 weeks. Micron shares were at a low $5.17 on October 24, 2012 but they have been steadily strengthening after that. The expectations of investors that the demand for NAND flash memory will have a strong growth in FY2013 have given a positive outlook for the stock of Micron in the last nine months.

Analysts point out that the major reason for the confidence of the investors in the shares of Micron is due to the fact that it will be completing in the near future the acquisition of Elpida, a bankrupt semiconductor company in Japan. The deadline for any objections to the acquisition of Elpida by Micron has passed. The management of Micron has announced that it is optimistic of finalising the deal in 3Q2013. This acquisition will take Micron to the second position in the NAND flash memory market, next only to Samsung.

Micron has already returned to profits in 2Q2013 with an EPS of $0.04 on revenues of $2.32 billion. The company will have higher production capacity and increased sales with the acquisition of Elpida. It is also pertinent to note that the prices of NAND flash memory has been steadily rising in recent time and they are expected to increase further or remain flat at present levels in the second half of FY2013. This will only strengthen the top line and bottom line of Micron in the coming quarters, despite the slightly negative outlook that Digi Times has presented on Friday. Analysts believe that Micron is in a better position to continue its profit making from its core business in the second half of FY2013, especially if the acquisition of Elpida gets completed in 3Q2013.

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