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Contributors: Douglas McIntyre Jon C. Ogg

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Thursday, October 05, 2006

Dear Micron: What Happened?

Micron (MU) announced Q4 2006 net income of $64 million, or $0.08 per diluted share, on net sales of $1.4 billion. Unfortunately the street estimates were $0.14 EPS and $1.41 Billion. It isn't as bad as it looks on the surface because of charges, but the shares are being hit 7%, or down $1.30 at $16.24 in after-hours trading. That is after the company closed down almost 3% at $17.54 in regular trading.

MU has a 52-week trading range of $12.37 to $18.65. After looking at the chart it looks like the company was not priced for any disappointment, so this is why it is down what is ending up to be 10% since yesterday's close.

Its yearly numbers were net income of $408 million, or $0.57 EPS, on $5.3 billion revenues. This compares to net income of $188 million, or $0.29 per diluted share, on net sales of $4.9 billion for the prior fiscal year.

"Micron effectively executed its diversification strategy, resulting in strong financial performance for the year while strengthening its platform for future success," said Steve Appleton, Micron's chairman, CEO and president.

As a result of the Lexar acquisition, the Company's operating expenses in the fourth quarter of fiscal 2006 include approximately $20 million for the Lexar operations; and the Company settled legal matters that took out $45 million, or three percentage points of margin.

At the end of the Q4 2006, the Company had $3.1 billion in cash and short-term investments and anticipates capital expenditures for fiscal year 2007 to be approximately $4 billion.

After-hours trading in the Semiconductor HOLDR's (SMH) $33.98 Down 0.21 (0.61%); regular close was -$0.26 (0.75% at $34.19. Intel (INTC) after-hours $20.69, -$0.10 (0.5%), regular INTC close $20.78, -$0.04 (0.19%).

Jon C. Ogg
October 5, 2006

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