SB:
No matter how one cuts it, Micron's results outline in sharp detail a company that is in serious trouble.
The sequential comparison is of greater interest than the y-o-y numbers.
Earnings that are a tiny fraction of the previous quarter's ($10.0 million vs. $72.0 million) on revenues that are mildly up ($955.0 million vs. $946.0 million) is the stuff of which Fidelity sized headaches are derived.
Pricing down 25% quarter to quarter also speaks of further hurts to be assimilated, given the continuing spot market price declines not reflected in these numbers.
A gross margin decline was expected, but 44% to 32% will get everybody's attention in spades.
Mbit growth is inconsequential.....not that it really means much given the pricing erosion, but it is still a major negative.
COGS up, SG and A up.......management being overwhelmed.
Still, they made money in a tough environment,...or did they?
Cash way down, inventories up, again (for the nth time), accounts payable up BIG.....all suggest an accounting stance that says, paint the picture as best we can, given the circumstances.
And of course, there are the non-mentioned items.....a big rise in interest expense (even if deferred and even if not a factor in this report), which will require improved, not declining earnings if those bondholders are to remain passive observers rather than become active (and very large) shareholders. Also noticeable by its absence is any consideration as to what becomes of the Lehi investment as regards depreciation....even friendly auditors will by now be getting antsy.
The telephone conference call will not provide much camouflage with respect to the fact that the company's situation is becoming desperate. I fondly hope that the stock does not gap down at the opening, but the probability that this will not occur is remote. The factual evidence is rather overwhelming. MU's problems mount.
Best, Earlie |
