What: Shares of Micron Technology (NASDAQ:MU) jumped on Monday in reaction to the company's fiscal-fourth-quarter earnings. Despite reporting big declines in revenue and profits, Micron beat analyst estimates across the board, sending shares up as much as 12% Monday.

So what: Micron reported quarterly revenue of $3.6 billion, down 15% year-over-year but $40 million higher than analysts were expecting. Weak PC sales continue to plague the company's DRAM business, but sales of mobile DRAM were much stronger, partially offsetting this weakness.

The company reported non-GAAP EPS of $0.37 for the quarter, down from $0.82 during the fourth quarter of 2014. Analysts were expecting non-GAAP EPS of $0.33. Profitability collapsed in the Compute Networking Business Unit, which includes PCs, with the segment operating margin declining by 10 percentage points from the third quarter to 7.6%. The mobile business remained extremely profitable, with an operating margin of 27.3%.

While Micron was able to beat fairly low expectations, its guidance missed the mark by a wide margin. The company expects first-quarter revenue between $3.35 billion and $3.6 billion and non-GAAP EPS between $0.20 and $0.26, well below analyst estimates of $3.74 billion and $0.38 respectively.

Now what: Micron's fourth quarter was ugly, and the first quarter will be even worse based on the company's guidance, but investors sent the stock soaring regardless. Management stated that it expects supply and demand for both DRAM and NAND to be relatively balanced in 2016, and if that forecast proves accurate, Micron's result could start to improve during the second quarter and beyond.

Investors are betting that the bottom for Micron will be profitable this time around, unlike the last time that DRAM oversupply plagued the company in 2012. In that year, Micron posted a $1 billion loss as DRAM prices fell far faster than manufacturing costs. If Micron's results begin to improve following the first quarter, it could be a sign that consolidation in the DRAM industry will lead to higher average profitability for Micron in the future. That outcome, however, is far from certain at this point.