Micron Technology, Inc. (NASDAQ:
MU) is scheduled to release its Q3 2010 results after the market closes on June 28, 2010. Guidance for May quarter sees flat bit growth and cost reduction Q/Q in DRAM and mid to high-teens bit growth and high-single digit cost reduction Q/Q in NAND.
Micron Technology, Inc. has established itself as one of the leading worldwide providers of semiconductor memory solutions. The company''s quality memory solutions serve customers in a variety of industries including computer and computer-peripheral manufacturing, consumer electronics, CAD/CAM, telecommunications, office automation, network and data processing, and graphics display. The company''s mission is to be the most efficient and innovative global provider of semiconductor memory solutions.
As for the Q2 of 2010, the company had net income attributable to Micron shareholders of $365 million, or $0.39 per diluted share, on net sales of just under $2 billion. These results compare to net income of $204 million, or $0.23 per diluted share, on net sales of $1.74 billion for the first quarter of fiscal 2010 and a net loss of $763 million, or $0.99 per diluted share, on net sales of $1.0 billion for the second quarter of fiscal 2009. Revenue from sales of DRAM products increased 24 % in the second quarter of fiscal 2010 compared to the first quarter of fiscal 2010 due to a 17 % increase in unit sales volume and a 7 % increase in average selling prices. Revenue from sales of NAND Flash products were down slightly in the second quarter compared to the first quarter due to a slight decrease in average selling prices. The company's gross margin on sales of memory products improved from 27 % in the first quarter to 35 % in the second quarter due to both an overall increase in average selling prices as well as decreases in manufacturing costs. The company generated $804 million in cash flows from operations in the second quarter of fiscal 2010 and ended the quarter with cash and investments of approximately $1.9 billion.
Analysts' estimates for Q3 2010 range from a low of $0.29 to a high of $0.49, compared to a consensus estimate of $0.41, with number of estimates being 16 and the co-efficient variance 12.61. Gross margins likely to decline from the Feb peak of 35%, lowering overall company gross margins in May quarter by 270bps to 30%, due to higher cost wafers from Inotera and NAND price decline of 10% outpacing 6% cost reduction. DRAM costs should begin to improve materially after the Aug quarter as Inotera 50nm transition to stack process ramps. Expect total revenue to touch $1996.4 million in Q3, with the gross margin at 30% and operating income being $348.9 million. The proforma net income is likely to be $301.9 million and EPS $0.32.
The stock closed at $9.64, down 2.80% on June 22, 2010 and most analysts' rate the stock as a relative Overweight with an average price target of $14. MU stock shows high correlation with its memory gross margins. Continue to prefer NAND supply-demand fundamentals on lower supply concerns this year and recommend SanDisk as a pure play.
