Earnings Preview: Micron Technology

Micron Technology (MU) is expected to report Q4 earnings Wednesday Oct. 1 after market close, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is a loss (22c) for EPS and $1.55B for revenue, according to First Call.

Analyst Views

Thomas Weisel expects Micron to report Q4 roughly in-line with consensus estimates as DRAM ASPs declined roughly 20% through the quarter where Wiesel had expected DRAM ASPs to stabilize with demand increasing and supply flattening. Weisel modeled NAND Flash ASPs to decline 20% through the quarter, where the NAND industry ASP declined 33%. Weisel's non-GAAP EPS estimate is a loss (16c), above consensus loss of (22c), on improving DRAM costs and gross margin. Looking out to F1Q09, Weisel expects revenues to come in at $1.64B, (up 3.3% q/q) slightly above consensus' $1.61B as DRAM bit growth is expected to be up roughly 8% to 12% sequentially and NAND Flash growth in the mid-teens QoQ.

Weisel also expects DRAM ASPs to be down 5% to flattening while NAND ASPs are expected down another 10% QoQ. The firm's non-GAAP EPS estimate is a loss (12c) again above consensus loss of (15c) estimate as it believes Micron's move to lower cost production will continue to improve the bottom line. It expects further reductions in FY09 CapEx spending estimates based on weakening demand environment, short equipment lead-times, and a possible acquisition.

Management's CapEx FY08 estimate is $2.7B to $3B and $1.5B to $2B in FY09. Management has made clear its intention to be a DRAM consolidator. Micron is considering acquiring part or all of Qimonda (QI). Weisel believes the acquisition would be positive for Micron shares considering the combined company could become the #3 worldwide DRAM supplier; Micron could more than double its DRAM capacity while entering into another technology licensing and royalty agreement with Nanya through the Inotera JV.

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. 

Comments

[papita:]

I don't know why we even care about MU at all. this loser of a stock has been losing money for as long as I can remember. it's a freakin $4 stock.

2008 Sep 30 02:32 PM

[Mr. Papita:]

Anyone who follows the chip sector knows that a $4 stock today can be an $8 stock tomorrow (well maybe the day after tomorrow). Good article. This is such an interesting time in the market, but especially with all this talk of consolidation

2008 Sep 30 04:42 PM

[longandshort:]

If consolidation occurs, Micron will become a good cash flow company...look, we will always need RAM memory as long as laptops, desktops, servers, cell phones, etc are being churned out everyday.

2008 Sep 30 05:48 PM

[PTVA:]

I cant find anything on what they announced. Anyone have any idea?

2008 Sep 30 06:04 PM

[Brr_Enterpr...:]

They will report tomorrow - this is only an analysts opion of what the report may contain

2008 Sep 30 06:43 PM