(Micron Technology article updated with analyst commentary and closing share price of Micron stock.)
NEW YORK (TheStreet) -- Shares of Micron Technology (MU) have ended sharply lower Tuesday as investors get cold feet over its fourth-quarter outlook.

Micron stock finished Tuesday's trading session down 13.5% to $8.67.

On Monday, Micron reported net income of $939 million, or 92 cents a share, on net sales of $2.29 billion, beating the consensus sales estimate of $2.12 billion. These figures surpass the net loss of $301 million, or 37 cents a share, on net sales of $1.11 billion in the year-ago period.

During the quarter, Micron saw a 10% increase in revenue from sales of DRAM (dynamic random access memory) products, compared with the second quarter, as the result of a 9% increase in average selling prices and slight increase in sales volume.

Micron added that it recorded a gain of $488 million in connection with its acquisition of Swiss memory technologies company Numonyx.

Still, some of the initial excitement over the company's results in the third quarter waned when executives said in a conference call that Micron's DRAM growth could be flat or just slightly higher in the fourth quarter.

"I think the downward pressure on the stock is largely due to investors concerns that gross in DRAM may be slowing," Wedbush Securities analyst Betsy Van Hees said.

However, Van Hees also noted that this stance is being misunderstood by some investors.

"The guidance was based on slower-than-expected transitions to process technologies vs. a slowing of end market demand," she said. Van Hees' checks indicate that demand remains fairly steady with supply continuing to be constrained -- which "equals a favorable pricing environment for the DRAM industry." Van Hees forecasts that Micron's DRAM cost per bit will decline 50% in second half of calendar year 2010 vs. ASP (average selling price) per bit declines of about 15% or more in the same time period.

Dunham Winoto, an analyst at Avian Securities said that while some investors are selling shares of Micron due to a concern about weakening PC demand and therefore softer DRAM demand, there's also a concern that if demand isn't slowing and Micron isn't able to supply this demand as it makes its technology transition, "they won't be able to take advantage of this opportunity."

"That can be perceived as negative as well," Winoto said.

Micron competitors include Samsung, Elpida and Hynix Semiconductor.

-- Reported by Andrea Tse in New York

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