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TheStreet Open House

Micron Has Earned the Street's Attention

Stocks in this article: MUAMATSNDKSSNLFAAPLQCOMBRCM

NEW YORK ( TheStreet) -- After posting 2013 stock gains of more than 240%, memory chip giant Micron (MU), which until then had been somewhat of mystery due to fledgling chip demand, is suddenly on the radar of every investor who doubted that this performance was possible. I was not one of them.

I've been a firm believer in Micron's turnaround potential, particularly due to its strategic shift to higher growth markets like network enterprise, server and mobile. Tuesday, when Micron is due to release first-quarter earnings, management will need to convince the Street that the company can maintain its momentum.

[Read: Biotech Stock Mailbag: Inovio, Chelsea, Exelixis, Ariad, ImmunoCellular]

The Street will be looking for 44 cents in earnings per share on revenue of $3.7 billion, which would represent year-over-year revenue growth of 103%. Revenue growth projection seems a bit astronomical. But that's where investors have to remember the impact of Micron having closed on its deal for bankrupt rival Elipida Memory last July.

Around the same time, Micron announced that it had also completed its acquisition of a 24% stake in Rexchip Electronics.  Given that Elipida had already owned a 65% stake in Rexchip, this means that Micron now owns close to a 90% stake in Rexchip. (In addition to owning the full 100% of Rexchip's product supply.)

In two separate deals, Micron was able to boost is manufacturing capacity by roughly 45%. It's not hard to see why revenue growth is expected to be exceptional. Given the strong holiday quarter on the strength of consumer electronic devices, investors should be asking if Micron's revenue projections are high enough.

Micron's business consists of flash memory storage that requires little-to-no power to retain data, one what was once on verge of collapse from formidable rivals like Applied Materials (AMAT) and SanDisk (SNDK) when this industry's returns began suffering from low average selling prices.

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