Source: Micron Technology

Micron Technology (NASDAQ:MU) just reported third quarter results, falling short of Wall Street earnings targets. Has this high-flying growth phenom run out of rocket fuel?

The results
The memory chip giant's sales fell 3% year-over-year, landing at $3.9 billion. This was in line with the analyst consensus. On the bottom line, adjusted earnings per share fell from $0.79 to $0.54, just short of the average analyst estimate of $0.56 per share.

Management pinned the soft quarter on weakness in the PC market. This trend drove down both sales volumes and average unit prices for DRAM chips in the computer networking business unit. Micron responded by shifting its product manufacturing mix away from PC products and into higher-growth sectors such as mobile memory and server-oriented products. The cloud server sector delivered particularly strong growth.

In the storage division, operating losses held firm with a negative 3.7% margin. Micron expects its partnership with drive manufacturer Seagate Technologies to result in enterprise-class solid-state drives hitting the market "soon."

The mobile business unit flexed its muscles, showing a 24% year-over-year sales increase, while the division's operating income more than doubled.

Embedded sales and operating income held rather steady year-over-year. Here, sales increased by 3%, and income improved by 5%. These modest improvements were driven by automotive sales, with a gaming console surge expected in the second half of the year. If you see Micron as a play on the Internet of Things megatrend, that thesis has not started to play out quite yet.

Short-term woes with long-term potential
Looking ahead, Micron's management expects fourth quarter results to stick close to this third quarter report. Sales volumes, average unit prices, and manufacturing costs across the board are moving sideways, except for the troubled DRAM segment. There, selling prices are diving by "mid to high single digits" compared to the third quarter.

"We remain focused on the long term," said Micron CEO Mark Durcan in a prepared statement. "We continue to deploy advanced process technology to enable leading-edge products and drive manufacturing efficiency."

Micron has been a battleground stock lately, as several analysts published negative reports on the company. Shares rose as much as 3% in Thursday's early after-hours trading, supported by the relatively strong third quarter results, but then dove over 11% when the timid guidance figures showed up. That is on top of a disappointing year-to-date performance, as Micron shares had lost 32% of their value heading into this report.

My own investment thesis on Micron is running out of gas. The company was supposed to wield significant pricing power in both DRAM and flash memory markets, thanks to its imposing market footprint following the Elpida buyout in 2013. But the crucial PC segment turned out to be softer than expected, and it is more than Micron's manufacturing volume controls can overcome at the moment.

There would be no shame in taking my Micron chips off the table today, locking in a triple since opening that position in the summer of 2011. That being said, I like the way Micron is adjusting its product mix. This is a well-run company with plenty of target markets to choose between, and I would not be surprised if sales growth made a comeback in the second half of 2015.

So I will continue to sit on my Micron shares. I am too focused on the long-term to panic over a couple of difficult quarters.