Investopedia: Micron Still Searching For The New Normal

Commodity memory is an exceptionally volatile industry, and that's nothing new. That makes the concerns about Micron's (NYSE:MU) ASPs and weaker margins in the second quarter more or less par for the course. While it looks like the memory markets are on the road to recovery, investors have already seen a hefty rebound off the bottom and may want to ask themselves if they really need the turbulence and volatility that this stock is likely to produce in the coming year.

Fiscal Second Quarter Earnings Bring Trade-Offs  
Micron's earnings were a mix of good and bad news. Revenue performance (down 1% sequentially) was respectable, but investors may take a little issue with how that performance came about. Shipment growth was pretty strong, but ASPs were generally weaker than expected. While shipments (in bits) rose 21% in DRAM and 36% in NAND, prices fell 16 and 23%, respectively. The NOR business was also weak, as revenue fell 25% sequentially.

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Investopedia: Is Micron Bull Bait Or A Value Trap?

Looking at Micron's (NYSE:MU) results from Thursday evening, it is pretty clear that the chip market is not healthy. With memory chips filling such a fundamental role in so many devices, it does not seem out of line to say that "as goes memory, so goes chips." While memory has always been a volatile sector, there was not much in the Micron release to suggest that a big turnaround is on the way soon. And yet, with the stock trading at such an unchallenging multiple, it is worth asking if Micron is nevertheless a value today.


A Ragged Fiscal Third Quarter  
There was not much in the way of good news in Micron's fiscal third quarter report. Revenue fell 5% on a sequential basis and 7% from last year's level. In truth, there wasn't much strength anywhere. NAND sales fell 5% sequentially (with ASPs down about 5%) and DRAM sales dropped 7% despite a small uptick in price. In terms of operating units, Embedded Solutions and Wireless Solutions were strongest, which is not altogether surprising given the relatively better market for chips in automotive, industrial, server and mobile applications.

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