Memory chip maker Micron Technology (NYSE: MU) reports second-quarter earnings on Wednesday night. The last quarter was a sad story, and good news has been in microscopic supply for a long time. Is this the magic turnaround period? Read on.

What Fools say:
Here's how Micron's Motley Fool CAPS rating stacks up against some of its peers and competitors:

Market Cap (millions)

Trailing P/E Ratio

CAPS Rating

SanDisk (Nasdaq: SNDK)

$5,030

24.2

****

Micron Technology

$4,490

N/A

***

Rambus (Nasdaq: RMBS)

$2,450

N/A

**

Qimonda AG (NYSE: QI)

$1,320

N/A

**

STEC (Nasdaq: STEC)

$312

32.3

****

Data taken from Motley Fool CAPS on March 29.

The CAPS bulls like Micron as a turnaround play because the memory industry surely must be scraping the bottom of the sinkhole. The bears see just another former highflier being grounded by a weak economy and low consumer confidence.

What management does:
Oh dear. The gross margins tell the whole story here. Gross income was $5 million last quarter on $1.5 billion in sales, so pushing out more units isn't likely to help in this corrosive price environment.

Margins

8/06

11/06

3/07

5/07

8/07

11/07

Gross

22.8%

24.5%

25.7%

21.9%

19%

11.3%

Operating

2.3%

3.3%

3.1%

(1.4%)

(5.1%)

(11.1%)

Net

7.7%

8.5%

3.8%

(1.7%)

(5.6%)

(12.2%)

FCF/Revenue

12.4%

(3.2%)

(29.4%)

(40.9%)

(46.9%)

(43.7%)

Y-O-Y Growth

8/06

11/06

3/07

5/07

8/07

11/07

Revenue

8%

9.2%

15.2%

9.1%

7.9%

4.7%

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:
Micron is hardly alone in facing hard times in the computer memory industry -- profits are about as common as dodo birds, because of chronic global oversupply pushing down sale prices on every type of memory. The supply-and-demand imbalance will eventually correct itself, and probably overcorrect for good measure. Gadget makers like Apple (Nasdaq: AAPL) keep cramming more memory into their devices, and solid-state flash drives from SMART Modular Technologies (Nasdaq: SMOD), STEC, and others could soak up a good deal of the excess capacity over the next few years.

Those are positives for the mid-term to the far future. Right now, the memory market remains stuck in this miserable quagmire, and Micron will report another fat loss on flat sales. It's a well-managed company with many positives, but Micron can still sink a bit further before things turn around -- as they always do in this cyclical industry. This stock is watch list material today, but not portfolio fodder.

Apple is a Motley Fool Stock Advisor pick -- pick up a free 30-day trial and read all about the house that Jobs built. Or just sign up for a free CAPS account.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.