SAN JOSE, Calif. — A research firm has downgraded Micron Technology Inc. due to lackluster results and fab execution issues.

Micron (Boise, Ida.) missed Wall Street's estimates on Thursday (Oct. 5), but it also raised its capital spending for fiscal 2007. The company is ramping up a number of fabs, including plants in Virginia, Utah and Singapore.

That is the root of the problem with Micron, according to one analyst. "We are downgrading the stock from 'Buy' to 'Sell' based on the increased execution risk involved in the ramp of IMFT NAND in two 300-mm fabs at one time," said American Technology Research analyst Doug Freedman, in a report. The analyst is decreasing his share price target from $20 to $14.

The analyst was referring to IM Flash Technologies LLC, a joint NAND flash venture between Micron and Intel Corp. Micron is currently ramping up flash production in a fab in Boise, Ida.

The company is also putting its NAND devices in production within its 300-mm fab in Virginia. And in the near future, Micron will put its NAND parts in production within its 300-mm fab in Utah.

"We believe that the August quarter results are indicative of certain execution difficulties experienced while managing fab ramps and converting the core DRAM Tech joint venture fab," he said, referring to the company's Singaporean fab operation, Tech Semiconductor. Tech Semiconductor is converting from a 200- to a 300-mm fab.

"The company's 7.5 weeks of inventory is a testament to the poor execution of the fabs and loading. With a hot market we would have expected to see WIP worked down and extra attention being paid to increased output," he said. "While the next quarter or two may be okay in terms of earnings strength, the outlook with increased NAND output and continued conversion of the Tech JV to 300-mm makes taking profits and waiting for a better entry point the lower risk move."