Wednesday, June 22, 2011

Micron Technology (NASDAQ: MU): Q3 Earnings Preview 2011

Micron Technology Inc. (NASDAQ: MU), the largest U.S. DRAM maker, is scheduled to release its fiscal third-quarter earnings on Thursday, June 23, 2010. Analysts, on average, expect the company to report earnings of 16 cents per share on revenue of $2.37 billion. In the year ago period, the company reported earnings of 92 cents per share on revenue of $2.29 billion.

Micron Technology, Inc., together with its subsidiaries, engages in the manufacture and marketing of semiconductor devices worldwide.  Through its worldwide operations, Micron manufactures and markets a full range of DRAM, NAND and NOR flash memory, as well as other innovative memory technologies, packaging solutions and semiconductor systems for use in leading-edge computing, consumer, networking, embedded and mobile products. DRAM chips are a key component in personal computers, while NAND flash chips are critical to portable electronics. 

In the preceding fiscal-second quarter, the Boise, Idaho-based company's net income was $72 million, or 7 cents per share, compared to $365 million, or 39 cents per share, in the year-earlier quarter. Revenue rose to $2.26 billion from $1.96 billion a year ago. Analysts, on average, expected the company to report earnings of 3 cents a share on revenue of $2.06 billion.

Memory chip makers have seen their top lines spike as mobile demand has grown at a rapid pace. Industry experts expect the trend to continue as Flash memory has set the industry standard for data storage on smartphones and other portable devices. Mobile phone analysts at Gartner project smartphone sales to reach roughly a billion units by 2015, providing the memory chip industry with significant growth opportunities going forward.In addition, there is increased optimism that the Dynamic random-access memory (DRAM) market is turning around. DRAMeXchange reported earlier this month that contract prices for DRAM chips increased in the first half of May due to a surge in demand from PC manufacturers. According to DRAMeXchange, PC manufacturers want to increase their shipments to gain further inroads into the market now that Acer's business has been on the decline. Given that demand from PC manufacturers will continue to be strong, prices are likely to increase into the first half of June, DRAMeXchange added.

However, memory chips are subject to some of the most volatile swings in pricing in the semiconductor industry. They are considered commodities and companies compete fiercely on price.

In April, the company announced the expansion of its operations in Xi'an, China. Also, Micron Technology and Intel Inc. (NASDAQ: INTC) expanded their NAND Flash memory joint venture operations with the official opening of IM Flash Singapore. IM Flash has ramped production of 25nm NAND Flash memory at the Singapore facility since mid-2010. The facility is expected to be at full production levels later in 2011.

During the quarter in review, the company announced plans to sell its wafer manufacturing facility in Nishiwaki City, Hyogo, Japan, to Israel-based TowerJazz. The deal has been valued at $140.0 million, of which roughly $40.0 million will be paid in cash and approximately 20 million through TowerJazz ordinary shares.

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