Initial Reactions to Micron (MU)

Print Email

Micron Tech (MU-NYSE): -$0.07 EPS and $1.42 Billion revenues vs. -$0.01 $ $1.465 Billion estimates.

EXCERPTS:  Megabit sales of memory products increased approximately 35percent in the second quarter of fiscal 2007 compared to the firstquarter. During the second quarter, the Company increased itsproduction of DRAM and NAND flash memory products by 15 percent and 60percent, respectively, resulting from improved DRAM manufacturingefficiencies and the ramp of NAND production in Virginia. Memoryproduction slightly outpaced memory sales in the second quarter,leading to a higher level of finished goods inventories. As a result ofthe higher levels of production, the Company’s per megabitmanufacturing costs for DRAM and NAND flash memory products decreasedapproximately 15 percent and 25 percent, respectively, in the secondquarter compared to the first…….. Market conditions in the secondquarter of fiscal 2007 for the Company’s memory products led tosignificant declines in average selling prices for much of theCompany’s product portfolio. Decreases in the Company’s costs of NANDflash memory products were eclipsed by a nearly 30 percent reduction inaverage selling prices in the second quarter. Cost decreases for DRAMproducts approximated the decreases in average selling prices,resulting in relatively stable gross margins for DRAM products whencomparing the second and first quarters of fiscal 2007. The Company’ssales of CMOS image sensors in the second quarter decreased from thefirst quarter due to weakness in the mobile handset market, increasedcompetition and shifts in market mix towards lower value VGA-basedcamera phones.

We are still waiting for formal guidance in the conference call, sothis 2% gain to $12.30 in after-hours may go higher or come in.Unfortunately many tech companies think that the investment communitywould rather hear guidance in their conference calls or they think theyare selling commercials.  Shares closed down 1.3% at $12.07 in regulartrading; 52-week trading range is $11.22 to $18.65.

Jon C. Ogg
April 4, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.