MU needs to focus on gross margins.

Since I donated two years of my life to Micron Technology, I am always interested in what they are up to. I thought that the Micron/Intel Flash partnership was good for Micron [financially] and bad for Intel. Intel has a history of doing well in what they excel at [microprocessors] and rarely do well when they acquire companies or fund joint ventures.

I pulled Micron's 10Q from the SEC website to look at their numbers for the quarter ended May 29, 2008, and what I found was - I mean, there are no words to describe how absolutely terrible their numbers are. Sales for the thirteen weeks ended May 29th 2008 was 1.498 Billion. Cost of goods sold was a whopping 1.450 Billion. Gross profits were $48 Million. That isn't terrible. It is pathetic, woeful. So, it cost Micron a whopping 97 cents to manufacture a dollar's worth of product.

Steve Appleton reacted a year ago by laying off workers, but that has ZERO impact on gross margins. Even Simplot will not bail Micron out [if he were alive] - since he would probably advice Micron to plant potatoes instead of trying to compete in the semiconductor business.

Back to the numbers - SG&A for the quarter wend down from $134M the previous year, to $116M in the mentioned quarter. R&D went down from $195M to $170M - all fantastic if the company can improve gross margins. Another cause for concern is that for the quarter, there was NO impairment in goodwill - that would have made the numbers that Micron reported worse still.....

The bottom-line: I am at a loss for words here. While I am tempted to initiate a call for heads to roll at Boise, even that will do absolutely NOTHING to improve gross margins. Micron needs to take very bold steps at this point in time, or, I predict that the last DRAM maker in the USA will not survive in their current form for long.

Bapcha