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Effect On Micron Technology, Inc. (NASDAQ:MU) After Sale Of Israeli Plant To Intel

Boston, MA 10/09/2013 (wallstreetpr) – Micron Technology, Inc. (NASDAQ:MU), the global marketer and manufacturer of semiconductor devices, is surging. In 2013 alone, the company has made its investors rich by more than 175%. Still, from a variety of research houses, analysts feel that the stock can further go up. The target price for the company is increased by the rating major, Credit Suisse from $20 to $25. As the current price of the stock is $18.5, the new target shows that the stock has a potential of going up by 33%.

Another agency, Stifel Nicolaus also raised its target to $24. Many questions arise in mind, about why the stock of the company is raising so much. It seems that the management of the company is taking right decisions to envision, of making their product mix to be more tilted towards high margin products.

The company recently sold its Israeli plant to Intel, which seemed to be a step in that direction. There were some products that were being manufactured in the Israeli plant of the company that had hit their peak demands and they were suffering a decline in the sales of those products. This would have resulted in higher overhead costs and lower revenue realization of holding the finished goods inventory, so this was a thing to be worried about by the management. So, the company decided to discard this facility and concentrate more and direct more funds in facilities that are producing products whose demands are growing day by day.

Eventually, the company plans to consolidate production to its fabrication unit in smaller unit in Singapore and Manassas. As per cost analysts, it is very unlikely that in near term, this will have much impact on the company. However, over long term, it can have positive effect on gross profit margins of the company. Also, companies will now concentrate on products having higher margin.

Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing.

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