headline dram 2010, question mark, short supply? that reflects bizarre strength in dram.he kind of memory that's used in all kind of computer and devices. you crack open a computer, drams will flood out of it. that's so unusual compared to this time next year when the business was tanking and seasonally has been tanking for years and years. clue number two. the research firm j & p says the first quarter has improved for emc. if business has gotten so much better for emc in the fourth quarter, then it should not be able to slow down in time to hurt the first quarter. i think when you look at the trajectory of emc, it's getting stronger by the week into january. the third. micron on its call last night, a huge tip company said that dram prices are up 25%. that's -- i'm flabbergasted it's so big. micron also gave flat guidance rather than down guidance, which is what analysts expected. because that's for demand for pcs and smartphones. also the servers are doing well and everything seems to be getting a boost from microsoft's windows. in other words, everything that goes int

it is the big of the marriage of drams in the world.as been there for years and years and years. no new capacity has been added in some time and that's aloud random access memories which have been falling in value to stabilize in price, and maybe even increase a bit. this week micron took a real header, why? because it's competitor is rumored to be building a new dram factory. just the rumors set the stock down gigantically because it could put the dram market back in equilibrium ors are worse, oversupply and it was all it took. similar similarly, seagate, and -- as neither they nor anyone else saw much of a need for new one given the decline in pc sales and the flash memory, a competitive form of chip, but get this, just the idea that a dram factory might be built sent these stocks lower for fear that it might lead to new disk drive capacity, that is guilt by supplies is yagz. yet, you don't need to be an econ major to understand stocks and if you don't understand supply and demand then you'll be mystified about how stocks move and a m

you have dram, dynamic memory. think of it as used for any type of apps or algorithms.wer is shut off, it's no longer in use. it's considered faster and cheaper versus nan memory, which is nonvolatile and it's saved, all of your passwords on a usb key. that's considered nan. what these analysts are saying is there's a lot of strength right now in the dram market. why we're seeing the subsequent, and it should benefit names like micron. i want to point out mizuho put out a small note, a few lines, saying they like western digital because that company focuses on the nan part, the nonvolatile. they say there's still a lot of upside in the near term for this name. so, there's -- it's a little confusing with all the acronyms but it seems like right now memory prices could see an upswing, even though we're seeing weakness in other sectors like semicap equipment, even names like nvidia have been falling down, all those a.i. plays. >> yeah. and that initiation of arm at underperform at bernstein, i think the chip business is confusing all the time. thanks. kristina partsinevelo

it's not really all that different from dram, except the transformation benefit is a lot less. in dram, we think there's an enormous change going on. >> let me give you the opportunity to talk about this market. a lot of hedge fund guys stick to their i talk about this stock, that stock, but they don't take broad market positions or calls. are we in a bubble? do you think we are? and why? >> well, it's really hard to say. there's certain aspects of the market, certain stocks within the market, that are behaving in a bubble-like fashion. like, you dismissed sort of traditional valuation measures. companies don't make profits, they don't make profit, and have no plans to make any profits. they don't have a business plan conducive toward making profits. if you think about some of the companies, you have a product which might make sense, and it might have a consumer benefit to it, right? but that's not the same thing as a profit stream. and the market seems to be getting these things confused within a narrow set of highly speculative stocks. there's lots of other stocks that are no

you see, there used to be many, many competitors in the dram business.ding japan and two large companies in korea, as well as micron. however, because of capital constraints and the long-term decline of personal computers, the major japanese companies combine into one entity. then collapsed only to be rescued by a $2.5 billion buy. the collapse took out a huge amount of capacity and left pricing firm. chose not to build capacity. they did that in part because of the negative mindset of the great recession. where every manufacturer is afraid to expand. every quarter since the micron lp, the deal closed a little less than a year ago. but thanks to the lack of new capacity, we never saw a collapse in pricing because there was no new supply. now, ever so suddenly as the stock of intel would tell you, we're getting insurgence in demand of devices that use drams. another positive piece on micron. that means prices are actually rising for these commodities as the cost of making the chips is coming down, leading to a potential explosion in earnings. no doubt bec

drams, disk drives, why are these doing so well, rick? >> well, so i can't speak to drams too much.re in the nand flash area and more of the products we try to design into the industrial base. so as far as the really volatile volume dram market, can't give you much perspective there. but we do play in certain segments of the microprocessor and hard disk drive space. it's not been dropping off a cliff for us. >> now, typically in this period, i'm used to hearing avnet. you talk about the seasonality on the conference call, but usually europe shuts down, i'm always nervous, but you declared a dividend yesterday. you guys canceled your dividend a while ago because i think you didn't have that kind of visibility. this is not the thing that i would expect from avnet which is always worried about its visibility these days. what happened? what gave? >> so, jim, we've talked consistently over many quarters about our capital allocation strategies and we've talked about we always like to prefer to invest in growth wherever we can. we've done some buyback recently as we've talked about on prev

dram expecting 31%. i asked mitch why the bite rating he said supply will be constrained leading to surprise increases. on the call they are going through the markets, what demand looks like cloud ai will drive long-term growth micron is positioned there he did say there was market weakness in the quarter no surprise there micron he's arguing is well positioned to capitalize the work from home trend is intact, strong demand. he said dram we have passed the bottom micron will continue to benefit from 5g. back to you. >> guy, micron is in every single market out there. >> you asked how do you trade micron here. we said you close above the 59 high or so before you crash like everything else. now we are at $80 or sho although we don't talk about these names in valuation, i will naen mention that given the earnings growth, there is a chance it continues to go higher from here i understand it has had a huge run. josh just alluded to this, but i think you still stay at micron at these levels. >> it's like prici

dram is slightly higher, so i would be a seller of micron. >> pete? >> what i liked most about this call was listening to the ceo, how confident he was, and he was projecting out further that dram would be up another 20%. he's talking about the revenue being as strong as it is these guys just mentioned it's 70% of the revenue, dram i think it's good. two weeks ago the stock was trading at 76, it ran up to 85 so unless it was an absolute complete blowout quarter, which it was pretty close, you just wonder what they had to say to continue the move it just made why wouldn't it just be a bit of a pause for now and then it starts making those legs up towards 110 like the bmo analyst was projecting and what guy was talking about as well. it doesn't seem that far-fetched, especially when you look at where this trade is now and the growth and obviously the demand is there. >> just broadly we were talking about the semiconductor etf and talking about how cyclical it was. t tim, you actually made this point. in the world where tom lee lives, it will go up anoth

dram pricing continues to be strong this stock is breaking out to the upside we talked about it for the last two or three weeks another name, zylinx made a 52-week high today as consolidation continues to half, i think in this space, we've talked about this before, xilinx might be a takeover candidate. >> this stock is just on fire. >> $100 billion in one day, it moves that much, it's crazy. >> the streets behind this, the investment committee is behind this no question this stock will continue to move you look at marvell, on a path to 65% gross margins, no reason to take your foot off the gas. you bring up netflix i think netflix out of all the f.a.n.g. stocks is set up, 200 bucks by year's end. >> i get why we're trading on the multiples we are the upgrade on nvidia, i understand that, i see that's where the growth is. i would rather own the gamers themselves, activision, even take two when i look f.a.n.g. versus chips, i actually think google has been dead in the water google is in valuation play. if you ask me, if i forced myself to play would you rather, i would own google all day

the dram is no longer random. it's logical.m line, i'm willing to give micron my blessing for speculation only but it's not for the faint of heart and if you're going to own it you have to be ware that at any moment the ax could come down. i would pay very close attention to the yellow cautionary flag here because the new capacity could be deadly to dram pricing. but if you're willing to take the risk, i do think there's probably some more money to be made in micron before the punch bowl takes taken away. >>> all right i need to go to sarah in my home state of new jersey. sarah. >> caller: hey, jim, booyah. >> booyah, sarah. what's up. >> caller: what's your thoughts on integris? they just reported. >> oh, man, geez. you got me in a stock you know i liked a long time ago. have to look at it again. i spent a lot of time prepping for that and i'm not going to say anything until i spend more time on it. i'm going to go to steve. steve in vermont, steve. >> caller: hey, jim, how are you doing? >> i couldn't have the ice cream. i'm

already been discounted micron has warned that they were going to cut production by 20% for their dramnd they also warned that 2023 as a whole would be a weak year for the memory markets so you take those factors in, take the fact that the overall memory market has been oversupplied for about 18 months that's put pressure on prices to come down. inventory levels have climbed. and you know, we often talk within the chip segment that there's been weakness in smartphones and pcs. that's starting to trickle over to enterprise. what does that mean for a company like micron, especially when they are dealing with so much inventory more specifically, we can probably pull up a number for you. gulf goldman sachs had an average of 169 days average, number of inventory versus the q3 average of 106 there's definitely some room to fall there, weven though the company has warned several times already, brian this is something we'll be looking at, as well as any cuts to capex if there's cuts to capex, that will affect equipment makers and china. we put so much evermphasis on te reopening of china >> ye

when you hear from the company the dram is okay. if you look at a chart the company doesn't look okay to me. further weakness. they're naming a bunch of other things they're concerned about. if i told you that a couple months ago kb homes would be up 20% and micron would be down 20% in the time frame you would have thought i was crazy. but that's what you're starting to see. a switch in where guys are long. >> one positive sign i thought was actually in microsoft today because obviously we all talk about this pc demand weakness. microsoft is the epicenter of that potentially. they also have their data center that they're working on now. but the point is it held 45 and that's a very big level. i was actually positively surprised by microsoft's -- it's called relative outperformance in today's market. given the fact that intel got crushed, micron. if you go with guy and say i want to buy this micron rebound, i think you've got more juice in microsoft. >> it wasn't just micron guy. it spilled over to hewlett-packard, adobe -- >> qualco

then where does the growth come from they've got dram and nand, and everybody knows what that's aboutat's a big game they have to wade through the very difficult times as well as some of the great times, but i think what's important here is this ceo made that first acquisition, and that puts them in the position into a.i that's what i think is so important. micron is no longer going to be this company that looks to just memory and just storage. they're getting into a.i. in a big way with the acquisition these made late last year. a.i., 5g, a lot of names we talk about all the time, i think this name actually has plenty of room to of up side not long from ow >> that's very interesting why do you think people don't pay enough attention to this major core part? all we hear about is nan and dram >> not only was it services, now it's wearables, so i think that's the story people aren't seeing the future. the future is where the growth will come from that's a.i. and 5g >> m.u. as the fast pitcher there. it's judgment time i mean, this is getting serious. tim seymour, you kick off the voting

back in november of 1993, dram demand started soaring when the stock was at $3.80.t peaked in september of '95 at $47 on a legendary call by a top flight semi-analyst who noted that demand had been overwhelmed by new supply. the tipping point had been reached. bingo, less than a year later the stock was back at $8. boom, then bust. we got another cycle that started with micron, this time at $17 in april of 1999. it rallied to an outrageous $98 in june of 2000 as the dot com bubble was in full swing. of course that was followed by one of the most precipitous declines i've ever seen. it plunged down to 8 bucks in january of 2003. noticing a pattern? it stayed down until november of 2012, when it stood at $5. two years later micron went to $36, where it peaked, pir wetted and fell back to 10 bucks in february of last year. this most recent run started there, and so far the stock's gone from $10 to 28 bucks, which is the smallest percentage gain of any of the boom-based rallies that i just showed you in the past 25 years. so based on the history of the magnitude of this

on the dram side it is about priming right now. in china b with you're going so see coming back online more kposty. that's going to contract some of the pricing. >> unless demand is there to pick up. >> the 33% growth in 2013 that this stock is accelerating on on the dram pricing, you're not going to get anywhere near that. you're going to get 5% this year. 1% in the outer years. you're going to need more -- >> the gavel has come down. >> incredibly cheap. i'm saying it's already priced in. folks are saying buy more here. i disagree. >> we'll leave the voting open as we discuss this on the desk. pete, i want to go to you. you've been a micron bull. >> since two cents. >> since two cents. right. >> i was the specialist on this when i was on the options floor. >> do you agree there's too much bullish sentiment in this stock. >> no. >> gloming on here after a huge run this year? >> i don't think there's enough. i think there's a lot of late folks coming to this name finally that actually are starting to understand the story. if you lo

this is from the dram exchange bull ten. the kind of memory that is used in all kinds of computer devices. if you crack open a computer, drams will flood out of it. that is so unusual. the research said that it has improved significantly for amc. i think when you look at the trajectory it is getting stronger by the week. clue, the third. micron on its call just last night. a huge chip company said that d ram prices are up. i am flabbergasted it is so big. there were flat guidance rather than down guidance. and that's because of demand for pc's and smart phones. if servers are doing well and everything seems to be getting a boost. so in other words, everything that goes into micron, everything that micron goes into is selling better than i thought. by the way this is the first time, number seven, that micron has been profitable in three years. this is driving a lot of tech that people don't understand. the fourth clue? on his conference call yesterday, the assembler said computer and storage is strong into q1. where? what bus

whether we see consolidations in the industry as we see in dram has yet to be seem. it is a strong indication of the problems the japanese are having, so i think that's interesting. also, hon hai being the buyout, i can only speculate but there's been a lot of discussions in the last year or two on the apple tv, so this could be a potential for the apple tv. >> before we go, give us something investable investors can chew on. which would be the key players you u'd be looking at. >> definitely samsung continues to be my top pick. we increase up to 7.5 million. it's up to 3 million yesterday. still an upside here due to a number of things. the dram recovery is drawing a lot of epf growth but also the lcd industry seems to be recovering and smartphones is a big driver of their profit. and secondly i would say micron. micron is well positions to actually also have a lot of mps growth and recover. >> interesting. thank you very much. samsung and micron. got it. thank you very much for being with us. analyst for global memory and consumer electronics. >> still to come on t

i understand the dram spike, i get that.ut what i don't expect from meg whitman is there are execution issues involving changes in management. i did not expect that from you. my travel trust has a small position in this thing. it threw me off, meg, to hear you say, listen, maybe we made too many changes. meg whitman executes. that's what she does. >> yes. >> you didn't. what went wrong here? >> well, you know, actually in truth we probably loaded a little bit too much on our senior people. so think about what we were doing this quarter. we hit the most intense part of the es separation, the beginning of the software separation and then the really intense part of setting up hewlett-packard enterprise as a go forward entity post these spins. so honing the strategy, getting it fit for purpose, streamlining the organization and reshaping the organization so that we could compete with this new strategy around make i.t. simple for customers, we power the edge and have the services to make it all happen. i have to say we might have

being introduced in the market that have more channels that acquired more memory and storage, more dram flash smartphones, 5g, this will drive long-term growth in the market, average capacity of content in your smartphone for dram and flash continues to increase. and we are very pleased, when you look at iot, autonomous, cloud, smartphones, and market drivers are all pointing to increasing content this year in smartphones, flash content is increasing by 50% on average and dram content by 25% on average demand trends are solid in our industry we are just in a period of excess supply and, again, the industry has done a good job, certainly micron has done a good job in terms of controlling its supply growth so that now the demand growth is greater than supply growth and that bodes well for the long-term fundamentals of industry in some parts of our business, the leading ethnodge knows, we seeing supply shortages for our business i'm enthusiastic about what is ahead for micron. >> i thought you didn't emphasize that enough on the call and i think people took a misdirection 80 million shares

that was dram and flash. it's not too late for you people. because micron makes both. micron's stock is way too low versus the possibility of margins for both flash and d-rams. i think it should be bought at $17 and change. how about the flip side? what happens when there is too much competition? all right, just take a look if you can bear it, at the stock of sprouts farmers markets. sprouts, a once nimble, exciting, natural, organic supermarket, c supermarket, we heard it was stealing market share from whole foods. and the latter began having the first hiccups in its own numbers. well now it's been downhill ever since. today sprouts announced it would have the same-store sales that were flat. it's actually a no-growth story with shareholders fleeing, with sprout selling nothing but spam and velveeta. it turns out that the rest aren't oblivious. target and walmart decided to cut these boutiques. when you start a price war, everyone loses. the pin action for sprouts has plummeted within 13%. also the stocking of whole food foodifoods and kroger down 5% and 4%. today gen

and so customers are looking now to build dram in the third dimension. that's by stacking chips on top of chips to create high bandwidth memory. and in foundry logic they're going to vertical transistors, which also is driving tremendous opportunity for a deposition and etch company. >> when i talk to you and other people in this, in this industry, i'm always proud that we still make the best and lam is the best. that's tim archer, president and ceo of lam research. lrcx probably from my first show, i thought that this was the company and the predators company that you should own if you want to own technology. memories back after the. >> break coming up, is it time to fill up your grocery baskets? cramer's getting a read on inflation and food prices with the ceo of spartannash next. frank holland worldwide exchange, weekdays, 5:00 am eastern, cnbc. >> get invested. join the club. >> the cnbc investing club is for everybody i joined to achieve financial freedom in retirement. >> jim cramer is the benefit you get that you can't get anywhere else. it's a gr

this is a stock now seeing a rebound with the dram pricing should correlate with nice bump in revenue. forward earnings are going to be improving. it can play catch-up we're long micron and i would be a buyer here >> all right i guess headline risk is headline opportunity depending on what those headlines say. we will watch it, craig and quinn. for more "trading nation" follow us on twitter @tradingnation >> ahead on "power lunch" chewy on deck for its first report as a public company >>> plus, clash in cloud president trump weighing in on a multibillion dollar pentagon contract between two tech giants >>> on today's tasting menu why one senator is calling for an fbi investigation into a seemingly harmless smartphone app. all this when "power lunch" returns. here, it all starts with a simple... hello! -hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome

>> the first thing is dram prices have been declining for the last little while from may to june. 1 respond 5% year over year they're dropping 13%. you had analysts that saying this was collapsing. there's concerns prices are dropping and inventory buildup maybe customers snapped up too many chips during the supply wail frenzy. they have a lot, so why buy some more and then the offset. the ceo said data center sales are really strong and so will that trend continue and offset the weakness that we've seen in pc and handset sales we've got freight costs climbing higher that should eat into margins smh and semi conductorsas a whole, this has been the worst month for semis and the etfs since 2008. >> barbara, kristina was just telling us the other day about the slowdown in demand for graphics chips now dram as well we know the overall pc market not so hot as far as demand goes what should we take into the second half? >> obviously the semis as a group are down over 30%. micron itself is down 40%. so i think you are seeing demand enclosing and consumer as we said, the key thing we want

you're seeing dram coming down this looks like the first quarter that's impacted. i have to believe given where they are that it's the first of many >> yeah, no, that's a grade point. dram did turn around to become a tailwind for us like we expected given where the prices are we definitely see this for the next couple of quarters really helping and being a tail wind for us we're excited to start to see that benefit after being such a big head wind. >> chuck, i see the america's up nine you're up five i see asia pacific down four i know some of that has to be china. while china may have been weak, i'm going to ask you about that. how much does it really matter to the overall past of what you have going >> we talk about it, jim china's only 3% of our business. obviously we don't want any aspect of our business to be down but it is a small portion so the revenue numbers that you just cited were really, you know, mostly related to china. as we look at our order run rate for the quarter, we were really pleased with, you know, around the world our global public sector bu

you can put a greenfield dram plant in six months back in '94. not anymore.his is going to go longer, and it's going to go louder than people think. >> it's funny we think about themes of course. internet of things you and i discuss it a lot here, typically i'm sitting on that side of you, but it's the same discussion talk about the growth and who's going to benefit from that. >> right. >> nvidia's a name you bring up -- >> oh, the triple crown winner. >> the gaming chips seemingly have all sorts of uses perhaps they weren't fully aware of for this internet of things we talk of where everything's going to be connected, sending off reams of data then going to allow the end user to optimize, function in a lot of ways and help for future -- >> so well put. >> -- future intelligence really for these things. >> right. it's machine learning. this is artificial intelligence. there's a guy i follow, we talked to him during the salesforce period with twitter, afshar, he is the guy i use, literally he posts on twitter the most important things you can learn about all a

dram, that's a kind of memory. and wireless chip segments. and its imaging and optics business.sera has the technology for smaller, cheaper cameras. expect to see its revenues go up from 28 million annually now to 100 million for this one division by 2011. that's a gigantic increase. you can bet a lot of it comes from the mobile internet tsunami. just about every mobile device now has to be equipped with a camera. tessera also expects to announce another big licensing agreement along the lines of one it recently made with samsung and toshiba by the end of the year. hey, there's a catalyst for the stock. but the big, big technology tessera's been talking about lately is silent air cooling. another thing we've got to learn about. it's an ionic cooling system. not like ionic breeze from the late unlamented sharper image. this replaces the exhaust fan on laptops. another small device. remember how hot your computer can be when you put it on your lap, a laptop and you're like burning? this removes about 30% more heat than a traditional fan, allowing the device to become even thinner.

. >> now, we do know there has still been weakness in some of the -- in some pricing in drams. saying that the word "sustainability" means that these companies, your customers see it, they're unwilling to go down the path of just total destruction of margins they're going to be considered about their buying, and one of the reasons this september could be the bottom? >> i think we've been in that world for a long time, if i'm honest with you, jim we live in a world where profitable market share the objective, not just market share for our industry and for the industry of our customers as well today we live in a world where memory customers are all reporting in the range of 40 to 50% operating income memory revenue growth has been at an all-time high, and that's a by-product, you know, of the fundamental value proposition that exists today in the realm of the evergreen verticals, as we talked about last time. the infrastructure needs of the world, the health care needs of the world, the agriculture needs of the world redefining connectivity and cloud memory and storage and comput

but this quarter will show a lot of insight into recent dram pricing. i think what you'll see is when they talk about the big fire that happened over in china that caused a shortage of dram chips that caused prices to go higher, i think micron is going to talk about the amount of market share there. it's shown huge relative strength in the pullback. lots of option buyers. we were able to get into the name this morning. a little higher than this, 1,838. we were able to sell some of the 20 calls that were trading up at 45 cents. great risk-reward there. but the name will continue, only on part of the position. i think it will move into the mid-20s. >> mike, why do you think it's lagging today? does that trouble you at all? >> it does. my two cents, steph, probably because i want it to be this way, it will rally into the close. i think a lot of shorts have covered in the name already. short interest has dropped 17%, down to 9%. but, you know, citi is out with a $30 target, credit suisse out with a $20 target. but analysts have it rated as a hold or lower.

that is a very big benefit for apple. >> to the pain of some of the companies that play into the dram story as we've discussed almost every day >> look at all the semiconductors they go down every day there's a flip side to that. who benefits from that and that's why i don't think that's priced in. asp being higher is but i don't think the cost side of the story is really appreciated. >> so tim is a great analyst you know our thoughts on the stock if you read the note but more broadly, i think what you've seen recently the rotation we saw it meaningfully over the last week. i'd love to see that it indicates broader health in the market >> it's been so short-lived every time it's happened >> no question about it. >> do you think it's different this time? >> i don't think we're sellers of tech, i think you have to be mindful of the performance year to date. you have to be mindful of the multiple expansion you've seen you have to be mindful of the fact that a lot of value buyers came in and bought these type of names, value being the most promine prominent, apple the most prominent of th

for memory and storage. >> for memory and storage. >> similarly -- for memory and storage, i mean dramnd flash same thing in smartphones. while the unit demand may be somewhat challenged, particularly at the high end, the content continues to increase and then, of course, you see here at the show, autonomous vehicles, right? >> talk about that >> yes >> where should we look? i mean, autonomous vehicles is one area, though i think the rollout of those clearly has taken some time. it's not like we're getting full autonomy in the next couple of years. then we had amazon's head of voice on with us yesterday, talking about, he's meeting with a lot more than just the smart speaker stuff about embedding this capability in bike helmets, in all kinds of different devices. which of those, between autonomous and the 5g-enabled, you know, other devices, which of those do you expect to have the bigger impact on your business >> you know, that's the exciting part about us, that our markets have now diversified, and micron, certainly, is executing well to broaden its portfolio, to add high-value solu

on top of that chinese handset makers like to buy them bundled with drams. but sandisk doesn't make drams, which gives samsung, micron a higher edge. they can offer a hybrid product. that's what the market wants. how come sandisk has managed to perform so well over the past two years? simple, for a long time there were major supply constraints in the nand flash market and excessive demand. but it now looks like there's a lot of new capacity coming online. hey, look last night, predicted the supply of nand chips would grow by 35% to 40% this year. man, that's the kind of supply increase that's ruinous for pricing. consider that sandisk forecasted 2% revenue growth this year even as they expect their shipments to increase by nearly 30%. that suggested 28% decline in pricing, that's hideous and possible that sandisk is once again being way too optimistic. one last problem, sandisk's highest margin products are flash based memory drives removable chips or peripherals. but consumers aren't buying external flash memory drives like they used to. in large part becau

domestic coal production fell by an average of 2.2% a year and lately the decline has accelerated dram with coal product down a staggering 8.4% year to date. when it comes to coal the trend is not your friend and this downturn shows no signs of abating any time soon and that's because coal production is not coming back and thanks to the host of regulations and a rise of natural gas which is both cheaper to produce and cheaper to transport. coal is increasingly looking like a thing of the past especially since 94% of the companies coal-fired power plants were built before 1990 and they were courtesy of the new pollution regulations, of the coal plants that existed, 17 were closed this year and you have to believe more will be shut or going forward and although a considerable amount of power will come from coal in short, king cole has been dethroned. we've already seen dozens of bankruptcies in the coal space since 2012 with another prominent member of the group, filing for chapter 11 bankruptcy, and they traded a staggering $140 as recently as 2011. now the stock's been delisted and ove

they really are correlated to dram pricing i don't know if the worst is over for dram, but the chart sure as heck doesn't look like it can go much further. >> i don't know if the worse is over either, but because of that the reason i'd fade it and at the start of the year it was their 28 and running up toward their 48 a share and it's had a great run and if there's any weakness to the downside i think there might be pressure and we heard today from intel so there's a lot going on on chip space you're still long intel. >> and you're at the pressen tagdz. i am. >> absolutely concerneded and that happened at the end of the day. >> what was that >> i'm in the fade camp -- >> oh, my god, weigh they didn't trade aly roey picture and it traded from 42.5 and this is in the wake of tk tech instruments and this is in the way of intel i think micron can trade down to 35 bucksesly to me, they have some cyclical headwins why would i jump into it >> good game. >> when you play according to the rules, it's a good became. >> you don't trade it, you just say trade it alibaba is a company that's been

is a lot of different discussions about micron and how commoditized they are, what is going on with dram, some of the core part of the business. relative to the s&p, down 45% year over year this move and this pop after the bell, an exaltation to my right, i believe, someone is happy about it, i think the bottom line here is this is about expectations these guys, first of all, they came in, they beat, they guided better, the expectations are these guys are in for a long winter in the middle of the summer and that's not what's happening. >> it is a stock that the average 27 analysts covered. the average rating i buy with a price target under 42. ten bucks above -- >> this is a stock that gets too cheap. but there is still an opportunity where you got to wait and wait for that opportunity to present itself. >> now that time >> it recently had i bought the stock not that long ago. it was virtually based upon the options coming in, looking ahead, and trying to read through all the tea leaves, the information, some not so good. this was an unbelievable report. that was crushing of the earnings

dram and nand, you're seeing a rebuild of inventories we saw a drawdown of inventories in the last sixmonths you just think you can overreact. >> what if the presumption is thatthis can start or make the rotation out of technology snowball there's already this thought in the market -- >> i'm not sure that's a bad thing. >> maybe it's not a bad thing. >> you've seen the action in energy, we'll get to the surge off the bottom tech has held up extremely well, i think, given this aggressive move into energy and more cyclical factors we talk about seiasonality. >> one other piece out there, we know our best estimate is that things are going well right now for apple, despite the news today. i think that's probably indicative of the broader semi market if you fast forward six, nine months from now, we'll be talking about 2019 i'm more concerned about the multiples on some of these chip stocks at the end of next year as we start thinking about -- because whenever you have a big year, you naturally have a pullback in the growth rate. to me, that's one of the bigg bigger -- >> but your presumpti

we had strong dram chip prices, as well. a lot of expectations about intel's numbers, 30 cents a share as opened to 4 cents in the fourth quarter of 2008. >> you know, i remember shanghai tanking 3% yesterday. today it's up over more than 1%. >> exactly. and a lot of ease concerns about those tight moves. the pboc, there was an auction i talked about yesterday worth a little over 50 billion yuan. the expectation was for a hike of about 4 basis points. that didn't happen. all of a sudden, as soon as that news got out, the ftse 100 started rallying. take a look at some of the tech stocks, as well. also take a look at media stocks. these two sectors will benefit from government efforts to prop them up. there will be more network integration in terms of media networks. the standout winners today, broadcast tv twigz television station rallying by their daily limit of 10%. but hong kong is not behaving in the same way. >> and ayesha faridi joins us live for the india business report. ayesha. >> thanks for that, christine. 0.5% gai

a whole new class of memory that is a mix between dram and nan. it's the speed of dram and the non-volatility of flash, and it's going to rearchitect ow memory is laid out on your pc. i can put that memory in your pc and give you a 20% performance improvement, just through the memory. that's huge! that's like a new cpu to you. >> and i'm used to the blue man and intel inside, but you've got a new campaign with lebron, who has been having an unbelievable series. how's that going? >> that one's going good. and i good give to our ceo. it's really showing intel in a different light, right? it's really all back to how do we take our compute models and push them into new markets, which we're doing quite a bit with sports now and digitization of sports. >> have you talked to him? it's a very different campaign from the old days. >> lebron -- yes, i have spent time with lebron, and the great thing about lebron, great sense of humor and he's just a great person. >> will there come to be a championship that you might see down the road? >> i hope so. you kno

samsung made some comments on dram prices which tim mentioned on the call should have been positive.ere was also intersol came out. a miss on the third quarter, revenue for the fourth quarter was light and also said that its computing market share would fall by 20% or 25%. >> and there's always that supply and demand issue with dram. the whole space was under pressure. intel was under pressure, it's a number one component of smh of the semiconductor market vectors. if you look at this group. it's been under pressure. they all bounce back going into the end of the day. >> you have to really consider that momentum's waning here. micron, intel, these would be huge success stories. they underperform 90% of the entire tech sector. they have not gotten back to the previous highs. and i'm actually long puts intel. >> all right. time now for the final trade. let's go around the horn. tim seymour. >> the way i see it, if you don't own citi, you definitely are buying a stock that gives you an opportunity. this was trading at two times price -- you'd run away from the stock. this is a stock wit

>> first of all, jim, i think kell owe the call said that the dram pricing was still a headwind, butrter, but it's still a headwind for sure and we continue to monitor that and meet with the suppliers and do all of the things that we can to put ourselves in the best position possible. as it relates to comparing us to other software companies, i think the thing to remember is the transition we're going through is really not one that any other company has ever gone through because we're bringing together a software and subscription business with a hard wear business so if we were a pure software business, we can make a decision and move it on to the cloud and deliver a subscription, flip a switch >> in our case we have to continue to build the hardware we have pricing structures that have hardware and the subscription on top and i would say that no one's really gone through a transition that looks exactly like ours and i'm pleased with the progress so far. >> speaking of transitions and we're going to run out of time ourselves after the transition and i had verizon and we were talking

products and the dram industry is generally commoditized and this gives samsung the ability to find new markets of which hopefully they'll make a lot of money. >> harold hughes is the ceo of rambus talking us to, exclusively about the $900 million settlement with samsung. we'll see who's next. the list is long. back to you. >> thank you very much, next, we will get you coming up on the stocks that are on the move right now and there are lots of them. we'll have the latest on the crisis in haiti as well and on what business is doing to help. >>> stay with us because in just a few moments we'll have a "power lunch" congressional summit and the minority whips of the house will talk us to about what happens to health care, bank taxes and much more after the dems' massachusetts meltdown. coming up at 12:45 eastern time. get ready for the fast money halftime report and melissa is here to tell us what she's watching. >> we have so much to talk about in just about 15 minutes' time or so, sue. two reasons all up-to-date. china tightening lending standards and the rally in the dollar will pic

that's allowed the company's dram business to maintain price, a lack of capacity for the second lineept pricing strong for that commodity, too. it has as both personal computers and cell phone sales have gotten a tad stronger here. an acquisition is behind the recent outperformance of linn energy, otherwise down market for oil and gas producers, linn is buying barry petroleum. and that will soon close allowing analysts to raise the numbers. and then there's celgene, revealing positive data that brings it still closer to being the first line treatment around the world. that puts the possibility of $17 of earnings power on the table as soon as perhaps 2015 which makes it an incredibly cheap stock even after the 2% run today. finally there's the refiners, a group that's been down and out not that long ago as the price of u.s. oil has come up so much that they weren't able to arbitrage the difference between cheap crude and expensive brent. refiners were able to buy crude, here or over there, refine it and sell the gasoline at the global price which was priced off of brent, the higher on

play to the upside has been fantastic for the stock and their dram ship deep manned, obviously, the reasonhe stock performed well this year i want to hold this stock. but the earnings, hwhen they miss, a 3, 4% to the downside. so in that sense, i want to stay protected and i want to use a put spread to do that. so this way i can kind of stay in the name and sort of -- starting to roll over, growth is starting to roll over here, we have seen the last couple of weeks, use protection, using a september put spread, 140, 125 put spread looking to pay $5. cost $5. max payout is about $10 on the trade and with break even below that 135 mark here, below there i get protection against my long stock position so that protects me for two-thirds of the downside if the earnings picture isn't great, this has been a play i have been using for the chip names all the way up and into earnings gives me decent protection on the downside and i can ride back to the upside in case this is a mini correction. >> okay. so we have got the trade carter, i know you have chart for us what are the technicals telling you

micron, its dram prices were strong. its flash memory was a little weak, but think equity this morning saying they think that the ipad ramp-up will be good for them. and apple coming back up after slipping a bit yesterday, right now at $237. xyratex, a storage maker blowing out the street and raising its outlook well above expectations. its biggest supplier to network appliance and it's feeling a behavioral effect this morning. skillsoft also higher after it says its acquisition deal has been up, now valued at $11.25 a share, putting the price at $1.2 billion. meanwhile, look at this biotech firm. ardea sees positive stage two results for a drug to treat gout, up 14% on that news. melissa, back to you. >> thank you so much, bertha coombs. got to take a break here, but "the faber report" is up next. >>> plus, the top-performing s&p stock for q-1. also, expectations are high for the ipad, as we've heard, hitting stores on saturday. which brings us to our street poll this morning. do you plan to buy one? go to squawkonthest

dram as or pull those from other countries or continue programs they might have otherwise considered canceling. dennis, back to you. >> thanks, julia. >> i thought the broadcast networks were all, but dead. this morning front-page of "the new york times" the leno shows up and they're still at the center of pop culture. >> that's where the audience is and the fastest -- quickest way to get an audience is to be on one of the four or five major -- major networks, but the really telling part there is the idea of how much less it costs to produce leno than it would to develop and produce five separate dram as. >> right. >> unless you can re-air those dramas. >> rival tv executives had told me at the time when they made this, look, they'll take a ratings hit, but they will save $300 million ayear. it would make nbc profitable. >> the local affiliate, the cost longer term for local affiliates in terms of audience sloss huge. >> that's the other surprise. it's a problem for them. >> that's the other thing, whether nbc would care what the other cable companies need and they're still needed in

they don't specialize in dram per say but they are very good at nand.hat's in some respects a better business. >> why do you think micron's stock should be worth where it was trading before? haven't things changed in terms of pricing and pc weakness? >> yeah, yeah. absolutely. and i'm not saying -- >> why should it trade at 36? trade meaning be bought at. >> well, look, i've got a $22 price target. that's where i think the business is probably worth today. i'm speaking on behalf of the management team and how they're thinking about it. they're saying, haif, six months ago we were trading north of $30 and we were looking at earning four bucks a share. now, what happened since then is the pc market got a little weaker. pricing got a little weaker. and their costs went up. these things you could argue are temporary from the management's perspective. and over time call it one or two years down the road, you know, they'll be back on a path to earning, you know, $4 plus and get back to a stock price that's consistent with where it was earlier in the year. >>

play obviously to the upside, fantastic with the stock, and their dram chip command is why the stockas performed so well this year. i want to continue to hold this stock. i'm looking for protection the earnings when they've missed or made or whatever you could see a 3, 4% move on earnings to the downside, and so in that sense i want to stay protected and i want to use a put spread to do that this way i can still kind of stay in the name if the nasdaq is rolling over, growth is starting to roll over, i can use protection, using a september put spread, the 140-125 put spread i'm looking to pay about $5 here this put spread costs $5 max payout is $10 on the trade, and would break even just below that 135 mark here, below there i get protection against my long stock position, and so that basically protects me for basically two-thirds of the downside, if the earnings picture isn't great. this has been a play i've been using for a lot of the chip names on all the way up and into earnings play because it gives me deep protection on the downside and i can still ride it back to the upside in

this is all about not just drams but flash. way a readthrough to apple, a lot of drams are needed. the margins remain high, there are supplier problems. the skeptics on the call, they were like, well, you can't really maintain this, there's going to be demand destruction. no. isn't there more supply coming? no. it was one of these conference calls it was like, will you shut up analysts and understand that we're doing $5.2 billion in revenues? this is when they get it right, when mu -- well, that's interesting. when mu gets it right, they are a bull saying moo. this was an amazing quarter. if you want to read a conference call where it's basically saying, guys, you have no idea how much money we're making and it is, there was tightness, there was a fire, a competitor, you can't make these things fast enough. but i think the flash surprised people. flash is tight. >> so on these targets now needham goes to 50, evercore says mid 50s are possible. >> they want to put a ten multiple -- let me just explain the way it works. there is

so, you get that dram, you know, push.e last leg of it, but anyone who's bet against micron going higher, it's been a losing bet for quite some time now. >> yeah, well, and the shares are moving around a little bit after hours. of course, we'll await more detail on the call. phil, people are curious about some of the pricing that they have to share on these key components about their capex plans, which as jon fortt kind of said might be a little bit shy, but looking for expense control here as well. what do you do with a name like micron with the sector, phil? do you like it? >> we do. we like the semiconductors right here. ralph talked about a couple of them, texas instruments and intel. we like mu in the mix. i think you've got a couple things going on. technology's not dead, certainly not pcs. we now know that that story is on ascendancy, rather than in decline. the other issue, and ralph made a great point before, is that these stocks did not get hit by that air pocket back in march and april, in part because there's p

sk hynix, they they do dram, they do nand, they've got high bandwidth. and they were saying that nand was weaker. and they're saying that that dram is weaker, not high bandwidth. but it doesn't matter. people decided the long knives are out again. for nvidia it was at 47 david off of random kind of we're going to get there. stargazer. that's what i call it. but that's that's leading the nasdaq down not apple for once. >> yesterday we saw the move up in any number of the names associated with this project. >> aam we were part of that stoking. >> aam in particular. obviously rene haas joined us in the early part of yesterday's show. but it's clear to me exactly what the benefit to aam initially is. and i think there is still some. >> they have a softbank has a position. >> yeah right they have. and there's i you know there's still i'm looking at some some decent research this morning. and certainly people come back to the idea. well is softbank going to have to actually if openai and softbank are both contributing 19 billion. that's what they have now put

and they see increase for dram and nand which is used for more permanent storage.n cnbc about 9:15 a.m. shares of the company climbing hire after hours back to you. >> guy, what did you make of the quarter here >> valuation alone stocks should be north of 100 bucks. you have the massive tops from last summer and the summer before but operating margins. 35.3%. last year it beat what the street was looking for and they went higher. i get people saying it is a cyclical business. but the lion's share of the revenue, they are extraordinary. i think this quarter should set up to trade north of $95 >> so maybe what we are seeing in the semiconductors isn't so nuts based on what micron is telling us >> micron is one of the great trading stocks of all time you have had three moves of up 25 or down 25. the key is they talk about demandand industrial and in auto and gaming. the question is where they will be but you can do the math, not an expensive stock. the valuation will be compelling, but i am not sure demand will be in the same place in six months. >> this all ties in t