Investors wondering whether chip stocks are headed into soggier days will watch
The Boise, Idaho-based semiconductor company will give a glimpse of quarters past, present and, investors hope, future when it announces earnings for the year ended Nov. 30. The
consensus estimate puts quarterly earnings at 64 cents a share, based on 24 analysts, up from 60 cents a year ago.
Micron's earnings should be the best indication yet about how bad November was for the big microprocessor companies, the ones that make the chips that run personal computers. In light of the recent spate of revenue warnings from Micron competitors like
Advanced Micro Devices
, as well as PC makers like
, it's obvious it wasn't a great quarter. (Those companies are on a calendar quarter and won't report full earnings until January.)
And it may be worse than Wall Street has planned.
Indeed, analysts have already lowered their estimates for Micron's quarter several times in recent months. Just this week, the estimate fell to 64 cents a share from 66 cents a share. But they still don't agree on what's coming: Estimates for the quarter range from 40 cents a share to $1.22, according to First Call.
Vincent Benedetti, a
analyst who expects earnings to come in at 68 cents a share, says there could be downside to the forecasts. For one thing, he says prices of commodity DRAM, or dynamic random access memory, have been falling steadily since August. Because so much of Micron's revenue comes from this product, which is used in PCs, analysts could adjust earnings estimates every time DRAM's price drops. (Gruntal hasn't done underwriting for Micron.)
On top of these lower prices, there are the other issues plaguing the semi industry that may have taken a toll on Micron, including a build-up of inventory and a changing supply-and-demand scenario. It's on those issues that Wall Street wants to hear from Micron.
"Micron is a big leading indicator for the semiconductor outlook ahead," says Benedetti.
Details will come during the conference call planned for about 5:30 p.m. EST Wednesday. That call, which will be Web cast, could be the first real remarks from industry execs on how they see the first calendar quarter of 2001 shaping up.
When Intel and AMD issued their revenue warnings in recent weeks, they talked only about how things were going in the fourth quarter. They and the PC makers have declined to talk about what's in store for business in 2001, leaving the stocks at the mercy of investors' imaginations.
What investors are imagining, so far, is a scenario in which an abundance of inventory will weigh on the sector for the next six months. The semiconductor industry will prosper again when and if the recession that even
Alan Greenspan is
worried about fails to emerge.
So speak clearly Micron. Investors aren't the only ones listening.