Lehman Brothers keeps market perform rating on shares of Micron Technology (MU ), and raised estimates due to the firm's PC unit divestiture.
Analyst Daniel Niles says the days of inventory increased from 90 days in November to 120 days. Given prior statements that finished goods were flat quarter-over-quarter, the increase in work-in-process and raw materials obviously is surprising. Due to Micron's PC divestiture, he raised his $0.35 fiscal 2001 (Aug.) EPS estimate to $0.50. Despite the lean PC-supply chain, he thinks June is likely to be weak for DRAM demand given recent weakenings in servers, portables and Europe. He remains cautious on Micron Tech, given its rich valuation of 4.2 times sales vs. one times trough levels, and rates market perform.