Micron Technology, Inc. (NADAQ: MU)
Among companies reporting earnings on October 1, 2015 was the behemoth Micron Technology. The company is best known for producing computing memory known as DRAM, or dynamic random-access memory, solid state disk drives for computers and laptops, and flash memory known as NAND. DRAM is mainly used for computers, while NAND flash is used in smartphones, cameras, and music storage.
Micron reported earnings of 37 cents per share on revenue of $3.6 billion for the quarter ended September 3. Analysts were expecting earnings of 34 cents per share on $3.57 billion in revenue for the most recent quarter. They also beat estimates for its full year results with earnings of $2.72 per share on revenue of $16.19 billion. Analysts had estimated for earnings of $2.67 per share on $16.17 billion in revenue for the fiscal year. In reaction to these earnings, shares were up nearly 7% at $15.80 after closing the regular trading session at $14.77.
“While fourth quarter results were impacted by continued weakness in the PC sector, we believe that memory industry fundamentals remain favorable over the long term,” CEO D. Mark Durcan said in a statement. The Street
“Although we continue to expect some challenges in the pricing environment during the current fiscal quarter our guidance particularly at the gross margin line also reflects the early capture of operational improvements that we have and sharing with you for some time. In the materials posted on our website we have included a dilution table that reflects the anti-dilutive effect of our capped calls at various stock prices. “ Barrons.com
Please see the accompanying daily price chart from June of 2015 up until the present. You can see the 45 degree angle of the downtrend from levels of roughly $28 down to the $14. Clearly, this shows that investors had been expecting poor results from the current fiscal quarters sales and revenues due out. The circle and the square area with green arrows I will discuss in the following paragraph.
An Earnings Trade
Being a professional trader and tape reader for nearly 20 years now, I chose to put on a bullish trade for the upcoming earnings. I was seeing signs that smart money was acquiring shares and options in this company today so I put on a trade with a high relative reward to risk ratio using call options. Basically, this allows me to play a volatile move in the stock to the upside if I am correct. These options expire in one day so the magnitude of a move in the pricing of them is extraordinarily huge. If I am correct and earnings are good or not as bad as expected, which happened to be the case in this example, I expected prices to move back to the rectangle area covering a gap created weeks prior in the circular area. As of 8 PM EST, shares were up over $1.00 or nearly 7% when earnings were released. This bodes very well for my call options I purchased today. In future articles I will delve more into these types of earnings trades if you, the readers, are interested. Please leave comments below so I may follow up!
About Micron Technology, Inc
Micron Technology, Inc., together with its subsidiaries, provides semiconductor solutions worldwide. The company manufactures and markets dynamic random access memory (DRAM), NAND flash, and NOR flash memory products; and packaging solutions and semiconductor systems. It operates in four segments: Compute and Networking Business Unit, Mobile Business Unit, Storage Business Unit, and Embedded Business Unit. The company offers DRAM products for data storage and retrieval, including DDR4, DDR3, and DDR2 that offer high speed and high bandwidth; reduced latency DRAM products that offer lower power consumption relative to other DRAM products; and other DRAM products to specialty markets, such as DDR2 DRAM, DDR DRAM, GDDR5 DRAM, SDRAM, reduced latency DRAM, and pseudo-static DRAM products that are used in networking devices, servers, consumer electronics, communications equipment, computer peripherals, and automotive and industrial applications, as well as computer memory upgrades. It also provides NAND flash memory products, such as flash memory cards comprising CompactFlash, Memory Stick, and Secure Digital; and JumpDrive products that are used in mobile phones, solid-state drives, tablets, computers, industrial and automotive applications, and other personal and consumer applications. In addition, the company resells flash memory products that are purchased from other NAND flash suppliers. Further, it provides NOR flash memory products that are electrically re-writeable, non-volatile semiconductor memory devices used in consumer electronics, industrial, wired and wireless communications, computing, and automotive applications. The company markets its products to original equipment manufacturers and retailers through its internal sales force, independent sales representatives, and distributors; and through a Web-based customer direct sales channel, and channel and distribution partners. Micron Technology, Inc. was founded in 1978 and is headquartered in Boise, Idaho. Yahoo Finance