If you are considering becoming a 1M/1M premium member and would like to join our mailing list to receive ongoing information, please sign up here.

Subscribe to our Feed

Micron on Shaky Ground

Posted on Monday, Jul 7th 2008

Micron Technology Inc (NYSE: MU) reported its third quarter results on June 26. Revenue was up 10% to $1.5 billion, driven by higher sales of DRAM and NAND flash products and beating analyst estimates of $1.47 billion. Net loss was $236 million, or $0.30 per diluted share. This compares with net loss of $777 million, or $1.01 per diluted share, last quarter and $225 million, or $0.29 per diluted share, last year. Analysts had estimated loss of $0.28 per share. Gross margin was 3.2%, down from 8.2% last year but was a marked improvement over negative margins in the earlier quarter.

DRAM sales were driven by a 10% sequential increase in gigabit sales but offset by a 5% decrease in ASPs. NAND sales were driven by a 40% increase in gigabit sales, offset by a 20% decrease in ASPs. As the company made continuous cost reduction efforts, the cost of goods sold per gigabit went down 15% and 25% for DRAM and NAND products, respectively.

Micron has a separate division for its CMOS imaging business, and CMOS image sensor sales increased 27% sequentially to account for 11% of total sales. Clearly, this percentage needs to increase for Micron to sustain itself in the fickle NAND/DRAM market.

Micron recently completed the creation of Meiya, its DRAM joint venture with Taiwan-based Nanya. Meiya’s initial manufacturing facility is scheduled to open in early 2009 and is expected to ramp up 10,000 wafers per week.

The company has improved the supply-demand balance for DRAM, and prices are trending upward. NAND prices, however, continue to be low as there is excess supply. Micron expects to spend $2.5 billion to $3 billion on plant and equipment in fiscal year 2008 and $1.5 billion to $2 billion in fiscal year 2009.

Micron is currently trading around $6, having lost over 50% of its value over the past year. Its market cap is around $4.5 billion. Caris & Company has initiated with a Buy rating while Cowen & Company set a Neutral rating before the earnings report.

I am not comfortable enough with Micron’s business mix to recommend this stock as a Buy.

Chart for Micron Technology Inc. (MU)

Hacker News
() Comments

Featured Videos


[…] By segment, both DRAM and NAND revenue declined sequentially while image sensor revenue increased. DRAM sales in Q4 decreased slightly compared with Q3 due to a 5% decrease in gigabit sales. NAND Flash products sales decreased 10% q-o-q due to a 20% decrease in ASPs, partially offset by a 10% increase in gigabit sales. Sales of CMOS image sensors increased slightly on a sequential basis and accounted for 12% of revenue, versus 11% in Q3.  […]

Mellow Micron - Sramana Mitra on Strategy Thursday, October 2, 2008 at 9:39 AM PT