Micron's $1.2 Billion Stock Sale Is a Smart Move
Memory-chip manufacturer Micron Technology (NASDAQ: MU) disappointed some investors last week when it announced a $1.2 billion offering of common stock. Not only does this move dilute existing shareholders by introducing new shares into the market, but it can be taken as a sign that management doesn't think its stock is all that cheap.
Micron doesn't exactly need the money. The company produced more than $5 billion of net income in fiscal 2017, and the balance sheet features more than $5 billion of cash. But Micron's business can be brutally cyclical. Exploding prices for DRAM and NAND chips have pushed Micron's profits to record levels this year, but if history is any indication, the party won't last forever. The proceeds of the stock sale will be used to pay down debt; that's a smart move in my book.
Image source: Micron Technology.
Source: Fool.com