Micron Stock Hammered By Uncertainty Over Chips

Micron Technology’s buoyant stock has taken a dive after the company’s biggest supporter on Wall Street downgraded his rating of the company.

The stock plunged 8 percent on Tuesday, which prompted droves of shareholders to call the Boise-based computer chip manufacturer. Micron spokeswoman Julie Nash said big and small investors called all day to ask what was going on.

They were told securities analysts are speculating about whether chip supplies are likely to exceed demand and whether chip prices are going to deflate, Nash said.

Micron’s shares have fallen 40 percent in value since they peaked two months ago at $94.37-1/2. After Tuesday’s sharp drop, Micron shares closed unchanged Wednesday at $56.875.

Tuesday’s decline was triggered by Rick Whittington of SoundView Financial Group, a key semiconductor analyst who has been a champion of Micron the past several years. He lowered his rating of the shares from “buy” to “hold.”

Whittington said he expects prices for Micron’s main product, dynamic random-access memory chips, to decline in 1996.

”(Prices) have held up inordinately high for two or three years. Some decline is mandated by the market situation,” Whittington said.

Nash said the stock’s decline since Sept. 11 has not affected Micron’s plans to expand production capacity in Boise or the construction timetable on its new $2.5 billion plant in Utah.

Investors fear the tight chip supply that drove up prices in the last two years will give way to a surplus. The result would be lower prices and smaller profits for companies like Micron.

“I just don’t have the enthusiasm on any semiconductor stock that I did six months or three years ago,” Whittington said.