Earnings Preview: Micron Technology

Micron Technology (MU) is expected to report Q2 earnings Thursday, June 26, after market close, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is loss (28c) for EPS and $1.47B for revenue, according to First Call. PacCrest expects upside for the May quarter, however it cautions for the August quarter guidance. Deutsche Bank is modeling revenue of $1.565B and a GAAP EPS loss of (31c). The firm assumes memory revenue of $1.41B (64% DRAM) and Imaging revenue of $155M. The firm is also modeling a gross margin of 3.6%, net of any inventory write-downs on a +6% sequential quarterly increase in DRAM ASPs and a -19% decrease in NAND.

Analyst Views

Deutsche believes there is upside to its GM and EPS estimates, but not revenue. Given the weakness in NAND ASPs it believes its revenue estimates may prove too bullish as NAND offsets further improvement in DRAM. On June 24, Cowen initiated coverage of Micron with a Neutral rating. Cowen said that while Micron has underperformed the SOX over the past year, the firm does not expect fundamentals to support a sustained upward move in the shares near term.

Key issues for the conference call: Forward guidance; commentary on the NAND supply/demand picture, inventory levels and pricing; also investors look for commentary on their JV with Nanya and possible forecasts for consolidation in the space.