Micron Technology (NYSE: MU) kicked off the technology section of the third-quarter earnings season with guardedly good news.

According to Micron CEO Steve Appleton, the back-to-school season was more delayed than weak, which would translate into positive news for the entire technology sector in coming months. Moreover, weak sales of laptops and desktops may be the result of strong demand for tablet computers and smartphones, cannibalizing the more traditional types of computing hardware. That would be a negative for systems builders Dell (Nasdaq: DELL) and Hewlett-Packard (NYSE: HPQ), both of which have yet to make serious inroads in the currently hot markets, but obviously great for mobility specialists Apple (Nasdaq: AAPL) and Motorola (NYSE: MOT). All of these gadgets need memory, so Micron is pretty happy either way.

Given these puts and takes, Micron's fourth quarter was predictably strong:

Line Item

Q4 2009

Q4 2010

Year-Over-Year Change


$1.3 billion

$2.5 billion


Earnings per Share



Large %

Operating Cash Flow

$357 million

$1.1 billion


Source: Micron press release.

The memory industry consolidated post-haste in the lean years of 2008 and 2009, and as part of that trend, Micron is now the proud owner of Numonyx, the former flash memory joint venture between Intel (Nasdaq: INTC) and STMicroelectronics (NYSE: STM). Further buyouts are getting unlikely, as memory chips are profitable once again with the concomitant rise in buyout prices.

It's also a remarkably cooperative industry these days; the ink is still drying on a 10-year cross-licensing agreement between Micron and Samsung that gives both companies access to the memory patent portfolios of the other, and also sends Micron $275 million in license payments during the coming quarters. If market leader Samsung feels a need to do all of that, Micron is surely sitting on some impressive and valuable technology.

Product prices are falling, as always, but demand for memory chips is stronger than you might have expected. Micron is a leader in the field, trades at just 4 times trailing earnings, and looks like a tremendous value play today.

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