Memory maker Micron (NYSE:MU) is set to report Q4 and full-year earnings for fiscal 2006 tonight, and the Fool is here to set the stage for you. Buckle your seat belts; it's a bumpy ride.

What analysts say:

  • Buy, sell, or waffle? Twenty-one analysts follow Micron, according to Reuters estimates. Eight of them advocate a buy, 11 say "hold," and the last two are skeptics who want you to sell.
  • Revenues. The average forecast calls for sales of $5.31 billion for the full year, which would be 8.8% higher than the total for 2005, but about 6.2% lower than the combined Micron and Lexar revenue for the same period.
  • Earnings. 2006 GAAP earnings per share should land near $0.30 according to the Reuters poll, up from $0.29 one year ago. Hold that thought.

What management says:
CEO Steve Appleton likes to live dangerously. This November, he'll race an off-road Porsche -- stacked to the gills with Micron-branded digital video equipment -- some 1,000 miles down the Mexican Baja peninsula. If you're worried that the combined CEO, president, and chairman would put himself at risk thusly, he offers these soothing words:

I don't know what could be worse than being in the memory business for risk-taking. If we were in some stable, monopolistic business, I'd probably get objections from my executive staff about doing this, but they're all dying to go.

Interesting word choice at the end, Steve. All jokes aside, Appleton is obviously the driving force behind this company, and this PR stunt looks irresponsible from where I sit. Does he run his business the same way?

What management does:
After a long, uncomfortable downward slide, Micron turned in an upward spike over the last couple of quarters. It's a shame that the margin uptick won't last.

Margins %

3/05

6/05

9/05

12/05

3/06

6/06

Gross

32.0

26.1

23.5

20.8

18.7

22.6

Op.

11.1

5.6

4.2

1.2

(1.7)

7.3

Net

9.4

5.0

3.9

1.9

3.5

7.5
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
The year-ago earnings I mentioned above were just Micron's. Lexar lost about $81 million over the same period, though the companies didn't close their reporting periods on the same dates, so an exact comparison is hard to come by. Still, including that in Micron's results would put a serious hurting on its $188 million net income. The Lexar deal will be highly dilutive to earnings for the foreseeable future, and since this is the first Micron report that includes post-acquisition numbers, you can expect a significant slowdown everywhere but on the revenue line.

Micron is trying so hard to become another SanDisk (NASDAQ:SNDK) that it's not even funny, but it just doesn't have the internal efficiency of its rival. Then again, very few hardware manufacturers can claim to be SanDisk's equal on margins of any kind. Lexar's consumer product presence may help in the long run, but in the short term it only hurts more.

There's a bonus attached to Lexar, though: That company had a lawsuit going against Toshiba that was recently settled in Micron's favor. That will bring $288 million of Toshiba payments into the company's coffers, but not in time for tonight's results. Patience, young grasshopper.

Competitors:

  • SanDisk
  • Spansion (NASDAQ:SPSN)
  • Rambus (NASDAQ:RMBS)
  • STMicroelectronics (NYSE:STM)
  • Infineon Technologies (NYSE:IFX)

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings , see what your fellow Fools in the CAPS community think about Micron , or take any of our Foolish newsletters for afree 30-day trial. Foolish disclosure is here.