Micron Shares Gain After $1B Notes Offering

Shares of Micron Technology (NYSE: MU), the only U.S. independent maker of memory chips, rose 5 percent after it announced plans to sell convertible senior notes valued at $1 billion.

In early trading Thursday, shares rose 36 cents to $7.52, on hopes the company would also benefit from the recent rise in prices for dynamic random-access memory (DRAM) chips.

Micron shares have risen more than 19 percent this year despite the Feb. 3 death of CEO Steve Appleton, 51, in a plane crash. Since then the company designated Mark Durcan, 52, its chief technology officer, as CEO and also renegotiated a deal with Intel (Nasdaq: INTC), the world's biggest chipmaker, for long-term production of flash memory chips through their joint-venture, IM Flash Technologies.

Subsequently, Elpida Technologies, Jaoan's biggest DRAM maker, filed for bankruptcy, which could mean Micron might try to acquire some of its assets, giving it a foothold in Japan. In the 1980s, Micron's complaints about chip dumping led to the first U.S.-Japan accords on chip pricing.

Micron, in Boise, Ida., is the sole remaining U.S. DRAM maker aside from International Business Machines Corp. (NYSE: IBM), which makes embedded DRAMs for internal consumption.

Micron said it plans to sell two separate tranches of senior notes convertible into common stock valued at $435 million. Both would have $65 million over-allotment options, bringing the total amount to be raised to $1 billion.

The Boise, Ida., semiconductor maker said details including interest rates, conversion dates and redemption provisions will be subject to negotiations with the note-buyers.

The note sale solidifies Micron's cash position as it prepares for strategic opportunities and repayment of debt, said Jefferies analyst Sundeep Bajikar. He added the chipmaker is benefiting from higher DRAM prices as well as higher demand from makers of advanced computer servers rather than PCs.

Micron reported cash and investments of $2.09 billion at the close of its second quarter on March 2.

Micron's market capitalization is $7.4 billion.