Q4 Preview: Weak Results Expected from Micron (MU) as DRAM Prices Tumble

Shares of Micron Technology (NYSE: MU) are trading lower ahead if it's fourth-quarter earnings report, due out after the market close Thursday. Shares are currently down just under 4 percent.

Micron is expected to report earnings of 2 cents per share on revenue of $2.13 billion. If the results hit expectations, earnings would be down 71 percent from the third quarter and down 94 percent from earnings of 32 cents per share reported in the same period last year.

Micron shares fell 42 percent to $5.91 at the end of August. The stock is down about 0.5 percent since, but 27 percent lower for the year. Micron has traded in a range of $5.18 to $11.95 over the last 52-week time frame.

Let's take a quick look at Marvell (Nasdaq: MRVL) to see how things are shaping up. In mid-August, Marvell beat on both fronts with earnings of 38 cents and revenue of $897.5 million. Third-quarter guidance also was inline for Marvell.

Elsewhere in the Semi space, Advanced Micro (NYSE: AMD) cut its outlook Wednesday after the market closed. AMD sees quarter-over-quarter sales growth of 4 to 6 percent, down from a prior estimate of up 8-12 percent. Gross margin guidance moves from initial guidance of 47 percent or so to a range of 44 to 45 percent.

One fund manager hoping for a ray of light at the end of the Micron earnings tunnel is Appaloosa's David Tepper. His fund holds 14,531,650 Micron shares according to it's latest 13F filing for the quarter ended June 30th. The position is about 1.45 percent of all outstanding Micron common. With shares down 27 percent for 2011, and down 19.5 percent from a close of $7.29 last September 29th, he'll be looking for a little redemption.

Data from Bloomberg has 15 analysts at Buy on Micron, 11 with a Hold, and 1 rating the company a Sell. The price target average on the Street is $9.90; the Street-low target is $6.50 and the high is $14.

Analyst comments

• Deutsche Bank is modeling for a GAAP loss of 9 cents per share on revenue of $2.13 billion. "We note potential for GAAP EPS to be well below DBe on any inventory reserves taken during the quarter due to lower cost or market accounting. We model [free cash flow] of negative $410 million, largely due to $900 million of cash CapEx in the quarter. On [average selling prices] we model DRAM -8% q/q and NAND down -6% q/q. We expect NAND ASPs to be down >10% q/q due to a larger mix of high density products while like for like price declines are likely to be benign."
  
  
• Wedbush sees flat earnings with revenue of $2.028 billion. The firm said, while PC DRAM spot prices have seen a spike, DRAM prices may have peaked. "We are concerned that DRAM spot prices could move back down,
  erasing most of the gains as our checks continue to indicate fundamental end market demand for PCs remains weak. We are also concerned that a slowdown in IT spending could hamper Server demand which has remained relatively strong."
  
  NAND checks indicated demand was in balance, with Micron gaining share in both client and enterprise SSDs. The trend will help offset weakness in DRAM.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release. You can also check out Micron's past performance at Streetinsider's Micron Income Statement.

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