Micron: Half Empty or Half Full (MU)

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Micron Technology (NYSE:MU) earnings are out for its quarter-end August 30, 2007:

  • For the fourth quarter of fiscal 2007, the company incurred a net loss of $158 million, or $0.21 per diluted share, on net sales of $1.4 billion. 
  • First Call had consensus at -$0.22 EPS and $1.4 Billion in revenues.

Most of the commentary isn’t exactly a ringing endorsement, but you should be advised that Micron is known for not giving formal targets on many occasions:

  • The company’s fourth quarter and fiscal year 2007 results were heavily influenced by industry supply/demand dynamics that depressed average selling prices for memory products.
  • The company’s net sales for the fourth quarter of fiscal 2007 increased 11 percent compared to the third quarter primarily as a result of higher megabit sales of memory products. Compared to the prior quarter, fourth quarter megabit sales increased approximately 25 percent and 60 percent for DRAM and NAND Flash memory products, respectively, while average selling prices for both DRAM and NAND Flash memory products decreased approximately 15 percent.
  • Sales of NAND Flash include sales from the company’s consolidated NAND Flash manufacturing joint venture with Intel ("IM Flash") to the company’s joint venture partner at long-term negotiated prices approximating cost. The results for the fourth quarter include a charge of $20 million to write down the carrying value of work in process and finished goods inventories of memory products to their estimated fair market values.

POSITIVES:

  • Sales of CMOS image sensors in the fourth quarter of fiscal 2007 increased approximately five percent compared to the third quarter primarily as a result of higher average selling prices reflecting the company’s shift in mix to higher megapixel products.
  • The company’s manufacturing operations achieved noticeable scale improvements in 2007, with wafer production increasing in excess of 20 percent over fiscal 2006. The company’s cost of goods sold per megabit decreased in the fourth quarter of fiscal 2007 compared to the third quarter by approximately 10 percent and 40 percent for DRAM and NAND Flash memory products, respectively.
  • During the fourth quarter of fiscal 2007, the company began executing initiatives to drive greater cost efficiency and revenue growth. The company recorded a restructure charge in the fourth quarter of $19 million comprised primarily of employee severance and related costs resulting from a reduction in the company’s workforce in the quarter. The company continues to pursue opportunities to lower its overhead costs through the utilization of partnerships and other outside relationships.
  • Micron ended the fiscal year with cash and investment balances of $2.6 billion.

Shares of Micron are down 2.5% at $11.49 in after-hours trading, but that is after shares rallied almost 4% at the end of the day on stronger hopes that earnings would impress.  If you want to see how this compares to late morning projections you can see it here on the site.

Jon C. Ogg
October 2, 2007