The rise in the data storage market is phenomenal and this can be a boon for companies providing storage solutions. Micron (MU, Financial), a manufacturer of a gamut of products pertaining to storage solutions, is riding high with this market growth. Flash memory (NAND) and Dynamic Random-access Memory (DRAM) are products that are primarily used for storage. These products foresee a high demand for use as storage in computers and servers.
From an investor's perspective, it's interesting to see that Micron is focused on cost-cutting measures to improve margins to attain a healthy bottom line. This strategic move was exemplified with Micron blocking all production of LEDs and selling its wafer manufacturing facility in Italy to further push up margins. The prices of DRAM and NAND have been increasing this further add to the margins. The healthy demand supply is also helping Micron to reduce its inventory. The company is also optimistic for NAND; it anticipates a growth of around 40% in the 2014 calendar year.
Financial Performance
The company recently declared is Q4-2014 results and was firing all guns. Revenue witnessed a stout growth of 48.7% year over year, to record $4.23 billion. The gross margin was up by 7.9% year over year, to record 32.8% as compared to 24.9% in the same period last year. The company emerged with a non-GAAP net income of $961 million.
Growth Market
Despite the sun setting on the PC market, the DRAM market is witnessing substantial growth, mainly due to growth in areas like mobile, tablets and most significantly, data centers.
The storage demand is constantly increasing as data centers and servers in the cloud environment require massive storage capabilities. Companies adapting to big data is also creating a huge demand for storage. This is leading to an increased demand for Micron's new SSDs (Solid State Drives). Micron's P400m can allow a single server to manage storage data in petabytes (1048576 Gigabytes). Micron P400m signifies the company's intention of tapping the big data market.
Acquisitions that helped Micron
The company’s acquisition of Elpida, a struggling DRAM player in Japan, proved fruitful as it helped in exceeding the estimated revenue guidance for Micron. This acquisition also increased Micron’s memory portfolio, as it includes a 300mm DRAM fabrication plant. Micron, also acquired 65% stake in Rexchip. Micron is now enriched with the technical staff of Elpida and Rexchip, as a result of which it cut off its employee base by 5%. This is a cost saving measure that helped the company to attain higher margins while keeping productivity intact.
New product release
Micron recently release solid state Drive (SSD) M550. Micron claims this to be the fastest performing SATA SSD’s. This product mainly caters to the growing demand in media and entertainment industry. M550 provides higher seeks time which enables faster access to file and data retrieval. Higher data security can be achieved by use of M550 as it is equipped with hardware encryption facility. The new SSD, provides a better data protection and recovery. M550 will be only available as O.E.M under the brand name of Micron.
Conclusion
The SSD market has been constantly rising as the demand for storage increases. This market is poised at a growth and revenues are anticipated to cross $19 billion in 2014 that was around $9 billion in 2012. Micron is one such company that is going to reap the benefit of this growth. Investors for technology stocks can always keep an eye on Micron to fit in their portfolio.
