Micron Technology, Inc. (MU), AT&T Inc. (T): This Resurgent Stock Is Screaming for Attention, Are You Listening?

Chipmaker Micron Technology, Inc. (NASDAQ:MU) put doubts about a resurgence in its business to rest with a solid second-quarter report, and it wasn’t at all surprising. I had expected Micron to trump estimates, which it did comfortably if we eliminate losses incurred as a result of currency hedges, according to RBC Capital Markets analyst Doug Freedman.

Throw in positive commentary about better pricing environment for NAND and DRAM chips, and it becomes clear that Micron Technology, Inc. (NASDAQ:MU) is in for a better year ahead. Micron jumped as investors found the latest quarterly report to their liking, and the stock created a new 52-week high.

Thus, with so much optimism around the stock, it would make sense to take a deep breath and see how Micron could make investors wealthier in 2013. But before that, let’s take a look at the second-quarter performance in brief.

Solid all the way

Micron Technology, Inc. (NASDAQ:MU) posted revenue of $2.1 billion in the quarter, slightly up from $2 billion in the prior-year period. Net loss came in at $286 million, or $0.28 per diluted share, up from $282 million ($0.29 per diluted share) in the year-ago period. However, excluding a loss of $120 million on currency hedges, which were a result of the planned acquisitions of Elpida and Rexchip, Micron’s loss would have been lesser than last year.

More importantly, the company exhibited solid gross margin improvement, driven by a decline in manufacturing costs. Micron’s gross margin of 18% in the quarter was way better than the 12% it had reported in the previous one. The company saw better revenue from both DRAM and NAND segments, driven by higher volumes and stable pricing. Going forward, there are a number of factors which could take Micron to the next level.

The catalysts

Micron Technology, Inc. (NASDAQ:MU) is counting upon a number of trends to get better in the future, and higher sales of solid-state drives (SSD) are one of them. The company has witnessed rapid expansion of its SSD business. SSD shipments jumped more than 40% in the second quarter on a sequential basis, and things should get even better from here.

Micron has started shipping its enterprise storage products, and is making further investments in order to benefit from the proliferation of SSDs. Apart from SSDs, Micron is counting on increased capital spending by telecom companies to drive its DRAM business. DRAM bit shipments in networking constitute around 17% of the company’s top line, and grew 20% on a sequential basis in the previous quarter.