Micron To Benefit from Stock-Convert Offering

What might Micron Technology (MU) do with its cash after the company yesterday announced a shelf filing for $200 million in convertible debt and $250 million in common stock? Step up manufacturing or buy struggling memory makers, those are two ideas that jump to mind this morning.

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  Daniel Berenbaum with Auriga is puzzled, writing in a note this morning that Micron’s track record has been to raise money right when the DRAM industry is hitting a peak and about to decline, but that the DRAM industry actually appears to be on an upswing. “On the contrary … DRAM pricing is more likely to move up than down…” At any rate, he thinks an “intelligent” use of the proceeds of Micron’s offering could give the company an ability to move more rapidly into 34 nanometer production of NAND flash chips and 43 nanometer production of DRAM, which, he thinks would make things tougher for Micron’s competitors Hynix and Elpida.
  
  


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  Broadpoint/Amtech analyst Dinesh Moorjani also thinks the money could be well spent to give Micron a competitive advantage, writing this morning that the offering “would provide Micron with the flexibility to take advantage of potential near-term opportunities to acquire attractively valued distressed memory assets and/or participate in M&A opportunities.” Targets, he writes, could include Qimonda (QMNDQ), Spansion (SPSN), or Taiwan’s ProMOS Technologies. Like Berenbaum, he thinks the money will help the company be competitive in the cost of its chips “staying on course with process migrations in FY10.”
  
  

Micron shares today are down 12 cents, or 2.8%, at $4.19.