Micron revenue comes. Here's what to expect.

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Revenue does not matter when
Micron Technology

reports its fiscal performance in the third quarter on Tuesday. Wall Street analysts have already slashed their profit forecasts for the memory-chip company. On Friday JPMorgan analysts Harlan Sur cut their income tax estimate by 2020 by more than two-thirds, to $ 1.21, from $ 3.90. Baird analyst Tristan Gerra did almost the same, and reduced the forecast to $ 1 per share from $ 3. 50, almost 50% higher than the last levels. Gerra rates Micron share Underweight with a $ 28 price target, justifying demand will not be fast enough to keep new production capacity from cutting down the cost of chips.

If this is a Goldilock scenario, Raymond James analyst Chris Caso plays the role of the baby bear. He considers the Micron share on Market Perform and has not set a target price for the stock. He expects Micron to lower its earnings forecasts, but believes that the stock market for book value does not have much more to fall. (Caso did not adjust its earnings forecast in a report that predicted Friday's results, apparently preferring to wait for the company to provide an update.)

Income estimates and stocks are tumbling because memory pricing is falling and because the US government is preventing companies from do business with Huawei Technologies. Micron generates about 13% of Huawei's sales.

The Micron share is down 41.8% over the last 12 months, far worse than the 4.4% gain of
Nasdaq Composite
and 2.9% gain in the Philadelphia Stock Exchange Semiconductor Index (SOX). Micron shares trades at 9 times estimated tax cost 2020 revenues, a large discount to other semiconductor companies, but in line with
SK Hynix

(000660.Korea), another memory card manufacturer.

Here are some important points to see when the company reports numbers, along with some recent history.

• Investors will be eager to judge the demand for computer memory. "Prices continue to slip," Analyst New Street Research Pierre Ferragu told Barrons

. "But demand continues to grow and the balance between supply and demand [could be] back at the end of the year." 

      
  • Ferragu and the other analysts are, of course, concerned that the Huawei situation will create, well, a lot of clutter. Blacklisting can damage Huawei's smart phone sales, reduce the demand for chips and slow down the return on a supply / demand balance, Ferragu says. Huawei accounts for about 10% of global demand for memory, according to the analyst. 
      
  • Industry inventories will be another major topic for analysts and investors on Tuesday night. Gerra writes that memory chip stocks are twice normal levels. The chip industry cannot increase prices before deliveries fall, making it difficult for manufacturers to rise. 
      
  • Another major factor for the stock will be cash flow. Caso believes it will be important for Micron to be free cash flow positive. He does not believe that free cash flow will be negative in 2020, but noted the risk due to the headwinds, such as Huawei, facing the industry. 
      
  • Finally, the technological shift to faster, cheaper memory chips is a subject that Micron investors always care about. Neither Micron nor any other chip company will get a pass on the basic task of producing better products at lower cost simply because demand is weak. 
      
   Write to  Al Root at allen.root@dowjones.com