Micron Technology: Naughty Or Nice? - Seeking Alpha

He's making a list

And checking it twice

Gonna find out who's naughty and nice

Santa Claus is coming to town.

My previous article about Micron Technology (MU) exhorted readers to submit their nominations on things and people and events in the Micron ecosystem that Santa Claus should be aware of for his upcoming visit. And my, how readers responded. I've gone through the comment thread and have tried to list the nominations. I've even interpreted positive and negative comments as nominations and have perhaps unfairly categorized them, which would be naughty, so I apologize in advance. Comments are taken verbatim, spelling and all.

Asking readers to present their naughty and nice nominations was a sanity check for me. Who felt strongly and about what? I thought most nominations would be intra company but some were broader: competitors, brokerage firms, Nanya, and even Mr. Market saw action. I was also impressed with the breadth of concerns: everything from Quantx and Automata to kudos being given for architecture and DRAM node shrinks. I was also interested in nominations for the same thing in each category: pre-announce earnings was both naughty and nice.

Herewith a listing of readers' nominations for naughty and nice:

Naughty:

"Nooo.... don’t pre-announce" (IOwn)

"The equity raise of a month or so ago definitely has to be in the running for most naughty." (MonkeyDo)

"Not talking about XPoint, like at all, is also pretty naughty." (MonkeyDo)

"This monster correction is super naughty, but not really their fault," (MonkeyDo)

"Rolling automata into spin-off without any mention" (RedFiero)

"Announcing 11 TB drive then pulling it back off the website." (RedFiero)

"Credit agencies not upgrading debt rating. c'mon man, 2.25 billion in bonds paid off early." (RedFiero)

"Nanya dumping shares on the open market" (Bargaineer)

"No real firm transparency into the 'Fab 2 nitrogen leak indecent' and the real cost" (davemc759)

"No road map on QuantX"(davemc759)

"No real updates on new memory 2" (davemc759)

"Everyone in IR including Sanjay for the continued lack of any real transparency." (davemc759)

"The disappearance of Automata." (davemc759)

"KJU scaring the bejezzus out of tech stock owners with threats to Seoul and Japan while his people suffer through a mass version of Truman." (greenzebra)

"DJT with one thumb on his Twitter send button and the other on the big red button while trying to distract attention from his bizarre affiliations with the only Orwellian society to rival N Korea." (greenzebra)

"All those algos set to dump semi stocks every time KJU or DJT ups the ante" (greenzebra)

"GS, who downgraded MU stock midsummer and then upgraded a few weeks later. Not naughty for being wrong, naughty, in my opinion, for being wrong on purpose." (kscopes)

"The NAND commentary by Huberty is simply fatuous. I'm modeling NAND prices down 30% this year and still seeing EPS north of $10." (William Tidwell)

"China’s Tsinghua group tries to steal MU for $23 billion in the summer of ‘15." (Gilariverman)

Nice:

"Ernie at Micron SHOULD PRE-ANNOUNCE to help clear up the misinformation that's being spread around by those who have a strong interest in Micron's stock going down." (Fund Manager)

"But what a signal it would send to the marketplace if they DID announce even a paltry dividend." (genlex)

"Hiring Sanjay" (Mr Investor)

"Industry discipline regarding no new fabs." (Mr Investor)

"This SA community-EP, WT, SB, RSA, overbet, link, Elisha, semi P, kopta, et all . . . I've learned so much here in this peaceful co-op" (RedFiero) (for his part in this citation the author blushes...)

"Agreed with Sanjay being a very 'nice' pick" (davemc759)

"Excellent execution on 1x 1y etc..." (davemc759)

"Maybe Santa can be generous for years prior decisions on choices of 3DNAND architecture or simply say that the currently smooth transitions are due to very good decisions" (davemc759)

"Sanjay for bringing vast experience and credibility" (davemc759)

"Scott DeBoer Executive Vice President - Technology Development for buying 27,000 shares around 40ish!? Nice floor before Dilution. Nice way to extend a little confidence to the brotherhood. $ 1million." (ricciahn)

Management Lessons, Electric Phred's take:

Well clearly, the literati of SA have more naughty nominations than nice. Clearly, we are an ungrateful bunch with a stock that's zoomed from the twenties to near $50 in one year. I think the point is "Where would we be trading and what would our P/E ratio be if the company took heed of some of these naughty citations?"

I'd call out two themes on the naughty side. 1) Investor Relations, Sanjay, and Ernie shouldn't think of everything as a secret. If our suppliers, competitors, customers, academic researchers, equipment vendors, and knowledgeable alumnae know it, why not tell shareholders about it? Not everything is a deep dark secret. As two examples, look at Quantx and Automata.

Clearly, many of the constituencies cited above know intimate details of what is happening with these two technologies; yet the shareholders know nothing and no regular updates are provided. When our partner Intel (NASDAQ:INTC) puts out a press release on the unveiling of a spruced up jointly-owned fab for Quantx/Optane, and the governor attends, and Micron says nothing, what are the shareholders to think? If it's good enough for the governor to know about and our partner to ballyhoo the event, it's good enough for Micron to brief its shareholders.

2) A second theme I see on both the naughty and nice side is the near financial illiteracy of Micron's board of directors. Launching a dilutive offering to buy back a straight debt instrument, rather than retiring one of the dilutive Ron Foster convertible tranches, which probably should never have been issued in the first place, is a prime example. The moans about launching a token dividend or continuing to pre-release earnings and provide regular product updates are other examples where the board just seems to be out of touch with the company's shareholder base.

Conclusions:

Thanks to all who contributed to the Naughty and Nice crowd-sourced effort. And apologies if I've been naughty and missed any contributions. I offer up that the stock's meteoric rise has been awfully nice. But I also must write Santa that the company's continued lack of transparency and penchant for secrecy, where "secrets" are known by many constituencies excepting shareholders, continues to be very naughty. We'll see on the December 19th earnings call whether Sanjay and Ernie are truly naughty or nice. Happy Holidays and good luck to all!

Disclosure: I am/we are long MU, INTC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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