That surprisingly persistent market weakness haunted Micron's third-quarter results and fourth-quarter outlook like a caped Bela Lugosi. GAAP earnings fell (gulp!) 92% year-over-year to $0.07 per share on 6.5% slower sales. That disjointed drop was the result of mildly lower sales and higher production costs while sorting out the wreckage of the Japanese disasters.
Operating cash flows fell from $889 million to $589 million, and huge capital investments in the quarter slashed free cash flows to $55 million -- down from $775 million a year ago.
Micron is suffering from the downward spirals happening at major customers Nokia
The report was met with a heart-stopping 14% drop in Micron's share price as well as a sea of analysts cutting their target prices. Mind you, I didn't say "downgrades," as most watchers remain bullish on the stock at today's reduced buy-in prices. And that's where the fun begins.
A large part of Micron's refocusing effort relies on solid-state drive, or SSD, products that go into high-end consumer products and pricey enterprise servers. When SMART Modular Technologies
So if nothing else, the SSD vector looks like a solid way out of Micron's current troubles. In this cyclical industry, a rebound is bound to happen eventually, and Micron really can't fall much further. Shares are selling for just about book value and 5 times trailing earnings, making even deep values like Intel look downright exorbitant.
I already have an "outperform" rating on Micron in my all-star CAPS portfolio, but now I'm tempted to take the next logical step with a real-money position. Yes, I'm impressed by the deep, deep value of this stock. If you're not ready to make these commitments yet, be sure to add Micron to your Foolish watchlist at the very least.