Micron Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Micron Technology (MU +4.80%) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Micron makes memory chips, which has exposed the company to a rocky market for years as the industry has gone through severe gluts that pushed prices down sharply. Lately, though, investors have been hopeful that a turnaround is finally taking shape. Let's take an early look at what's been happening with Micron over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Micron

Source: Yahoo! Finance.

Will Micron help investors remember the good times this quarter?
Over the past few months, analysts have gotten a lot more worried about Micron. They've nearly doubled their loss estimate for the just-ended quarter, and widened their consensus for the company's fiscal 2013 full-year loss by nearly a quarter per share. Yet the stock has rocketed higher, rising 37% since mid-December.

One big reason for the disparity between earnings expectations and Micron's stock-price movement is that Micron got resolution in a long-standing patent dispute with Rambus (RMBS 2.76%). Early this year, a court ruled that Rambus's patents were unenforceable, finally giving Micron some closure and taking away a threat that had held the stock down.

But Micron still faces a tough environment in its core DRAM and Flash memory business. Its acquisition of Japanese memory supplier Elpida will let Micron gain access to the lucrative iPhone 5, but with questions having arisen about the smartphone's success, any shortfall in its sales could negatively affect Micron. Moreover, an analyst firm downgraded Micron earlier this month, arguing that DRAM demand is slowing.

Still, the big opportunity for Micron comes from the broader Big Data initiative that many technology companies are focusing on. Although Micron rival SanDisk has also seen its stock rise as demand for flash memory picks up, even old-style hard-drive makers Seagate Technology (STX +0.00%) and Western Digital have gotten into the game, with Seagate having introduced a third-generation solid-state hybrid drive to boost speed and keep up with the level of innovation industrywide.

In Micron's quarterly report, watch for the company's latest calls on the health of the memory industry and its progress in moving forward with the Elpida acquisition. How the company handles its new foray into mobile memory could define its future for years to come.

Click here to add Micron to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.