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Riding High: Micron Technology


Shares of Micron Technology Inc. (MU) have gained 45% so far this year, topping the 17% return for the Nasdaq Composite Index.

Micron Technology is a manufacturer of high-performance memory technologies, including DRAM, NAND Flash, and NOR Flash. The Company's memory solutions find use in computing, consumer, enterprise storage, networking, mobile, embedded, and automotive applications. The semiconductor memory products are sold under Micron, Lexar, Crucial, SpecTek and Elpida brand names and private labels.

Micron has 4 business units:

-- Compute and Networking Business Unit ("CNBU"): Includes memory products sold into compute, networking, graphics, and cloud server markets. This segment accounts for a major part of net sales generated by Micron.
-- Storage Business Unit ("SBU"): Includes memory products sold into enterprise, client, cloud, and removable storage markets.
-- Mobile Business Unit ("MBU"): Includes memory products sold into smartphone, tablet, and other mobile-device markets.
-- Embedded Business Unit ("EBU"): Includes memory products sold into automotive, industrial, connected home, and consumer electronics markets.
(Source: Micron's Annual report)

In 2005, Micron partnered with Intel Corp. to form a new company called IM Flash Technologies LLC to manufacture NAND Flash memory. This joint venture unveiled a 32-layer first generation 3D NAND technology, the world's highest-density flash memory, in 2015 - becoming the second to Samsung to sell the 3D NAND flash chips.

Micron is ramping up its second generation 64-layer 3D NAND technology and expects to achieve meaningful output by end of fiscal year 2017. Meanwhile, its development of 3rd generation 3D NAND is progressing well.

In April of 2017, Micron entered into collaboration with Microsoft to help improve Internet of Things (IoT) security. The new initiative combines Microsoft Azure IoT cloud with its Micron Authenta technology. The newly-introduced Micron Authenta helps enable strong cryptographic device identity and device health management in flash memory.

In fiscal year 2016 (12 months ended September 1, 2016), operating income plunged 94% to $168 million and net sales dropped 23% to $12.4 billion from the prior year due to decline in DRAM and NAND prices and poor demand. Due to challenging market conditions, the Company posted a GAAP net loss of $275 million or $0.27 per share, reversing a year-ago net income of $2.89 billion or $2.47 per share in 2015. On a non GAAP basis, the Company's net income plunged to $66 million or $0.06 per share in fiscal 2016 from $3.09 billion or $2.72 per share a year earlier. The 2014 results were even better than that of 2015.

However, things have been on the mend since the first quarter of fiscal 2017, with the Company's net sales and profitability registering year-over-year growth, thanks to increased demand and stronger pricing for its products.

Net sales$3.97Bln$4.65Bln$5.57Bln
GAAP net income$180Mln$894Mln$1.65Bln
Non GAAP net income$335Mln$1.03Bln$1.90Bln
Non GAAP EPS$0.32$0.90$1.62
Operating income$438Mln$1.18Bln$2.07Bln

Looking ahead, Micron expects to do even better in fiscal Q4, 2017 as healthy industry demand is expected to persist into 2018.

On a non-GAAP basis, the Company has forecast EPS to range between $1.73 and $1.87; revenue in the range of $5.70 billion to $6.10 billion and operating income in the range of $2.20 billion to $2.40 billion for fiscal Q4, 2017.

Micron shares touched a new 52-week high of $32.96 on June 26, 2017. The stock is currently down 1.07% to $31.45 in pre-market trading today (July 17, 2017).

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