Moody's cuts Micron view to negative

Moody's Investors Service said it revised the outlook for Micron Technology, Inc. to negative from stable and assigned an SGL-2 speculative-grade liquidity rating to the company. The Ba3 corporate family and probability-of-default ratings were affirmed.

The agency said the negative outlook reflects expectations for continued challenging conditions in Micron's core DRAM and NAND flash memory markets. Over the past year, the memory markets have been hampered by excess capacity, lower unit demand and continued sharp erosion in the average selling price, and Moody's said that for most of fiscal 2007, the company was unable to lower unit production costs quickly enough to offset sharp average selling price degradation given the difficult DRAM pricing environment.

The negative outlook also reflects the company's weakened financial flexibility given Micron's capital-intensive business model and the agency's belief that Micron will be challenged to expand its leading-edge technology in a timely manner beyond consumer-based end markets, which depend in large part on consumer discretionary spending, an area that has experienced a marked slowdown in recent months.

The SGL-2 rating reflects the company's good liquidity, Moody's added.

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