Micron Technology CEO to Resign
In a sign of the growing problems of the computer memory chip business, Micron Technology Inc. said Thursday that its chief executive, Steven Appleton, is leaving the company and will be replaced by Tyler Lowrey, the firm’s former chief technical officer.
Appleton, a 35-year-old wunderkind who was appointed just a year and a half ago, is resigning for “personal reasons,” Micron said. That’s the same explanation the company gave when Micron co-founder and then-CEO Joe Parkinson and his two chief lieutenants resigned in September 1994, following a clash with J.R. Simplot, the billionaire potato magnate who is Micron’s largest shareholder.
Appleton has presided over an aggressive expansion at Micron. But recent softening in the price of computer memory chips, the company’s primary product, has cast serious doubt on the wisdom of that strategy.
Micron’s stock has plummeted from more than $94.75 as recently as last fall to just $32 in New York Stock Exchange trading Thursday. Appleton’s departure was announced after the markets closed.
Although Micron has sought to be the low-cost producer in the volatile memory chip business, analysts say South Korean producers have a significant cost advantage over Micron and could undercut the company in a price war. The declining value of the yen may also be helping Japanese producers.
“I wondered how long it would take before he [Appleton] would cut his own throat,” said Dan Hutcheson, president of VLSI Research in San Jose. “He was smart and moved up fast through the organization but he didn’t have the experience.”
Hutcheson said Appleton erred in moving ahead with a plan to spend $1.3 billion on a new chip plant in Utah when the market was showing signs of peaking. Appleton also may have made the wrong move in choosing to build the plant in Utah rather than sticking close to its Boise, Idaho, headquarters.
However, both the expansion and the decision to go out of state received strong backing from Simplot, the Micron shareholder who made his first fortune supplying potatoes for McDonald’s French fries.
Appleton, a Los Angeles native who started at Micron as a $5-an-hour production worker, got the chief executive spot in part because Parkinson, his predecessor, opposed Simplot’s desire to expand production aggressively and confronted Simplot about making overly optimistic projections of Micron’s earnings potential.
Micron may yet find itself facing lawsuits. It told analysts as recently as December that it did not see softening demand for its chips, but at the same time was scaling back its expansion plans, sources say. Still, Simplot continued to buy Micron shares last summer when they were close to their high.