It's a classic conundrum. What do you do with a well-run company in a very tough industry? Do you focus more on the company's solid balance sheet and growth opportunities, or focus on the key issues beyond the company's control?
That's been the biggest challenge facing investors in Micron Technology (NYSE: MU).
This past September, I laid out why I think this company is poised for a great future. And for a while there, the broader investment community was in agreement.
The stock's rebound began in December after a favorable legal verdict, which I discussed in this article.
And shares kept on rallying as prices for DRAM (dynamic random access memory -- what's used to store and retrieve data in computers), firmed up. Yet as DRAM prices have slipped anew, shares have given back the recent gains.
That's why a soon-to-be released announcement from Micron is so important. The company is hammering out the final details of a major acquisition that should help control the industry supply of DRAM, enabling producers to steadily garner firmer prices for their products.
A glut will soon end
Japan's Elpida was like the unwanted neighbor that shows up at your parties. The DRAM producer kept flooding the market with its DRAM chips, even though it was losing gobs of money. All that Micron and rival Samsung could do was hope that demand would outstrip all that supply, which has rarely been the case in recent years.