قالب وردپرس درنا توس
Home / Business / Micron bets on better than feared results and guidelines: 7 key findings

Micron bets on better than feared results and guidelines: 7 key findings



A positive May quarterly pace and relatively positive outlook for DRAM demand is driving Micron's earnings (Get Report) up.

Following the bell on Tuesday, Micron reported revenues of $ 4.79 billion (down 39% per annum) and non-GAAP earnings per share of $ 1.05. These figures exceeded consensus analyst estimates of $ 4.69 billion and $ 1.05. The gross margin was 39.3% after 60.9% in the previous year, but was at the upper end of a target corridor of 37% to 40%.

The storage giant expects revenues of $ 4.3 billion to reach $ 4.7 billion for the August quarter, down 47% on the year, and earnings per share of $ 0.38 to $ 0.52 , Sales forecast is at $ 4.5 billion, below a consensus of $ 4.56 billion, while the EPS forecast is well below a consensus of $ 0.58. The gross margin is expected to fall to 27.5% to 30.5%.

As Micron shares have fallen sharply since the beginning of May and short-term expectations are relatively low, markets are reacting positively to the numbers. As of the date of this article, the stock in OTC trading rose 8.2% to $ 35.35.

Here are some notable findings from Micron's earnings report and call.

. 1
Micron Slightly Improves DRAM Demand Forecast [March59007] In March, Micron predicted that the DRAM industry's bit supply in 2019 would increase by a mid to high percentage and industry bit demand would increase by a low to medium percentage. Now, even though Micron admits that the DRAM market is still oversupplied for now, the company expects a rise in demand for bits by mid-teens in 2019, but retains its previous bid for the bit offer.

Although the ban on Huawei parts is a headwind (more) coming soon, Micron said that DRAM holdings on enterprise server customers are "going to take a little longer than [it]", and the company sees a normalization customer footprints for cloud and graphics DRAM customers, as well as an increase in PC DRAM demand as Intel (INTC – Get Report) makes CPU shortages easy. As a result, Micron expects "strong growth" for its cloud, graphics and PC DRAM deliveries in August, followed by "more normal bit growth" in the November quarter.

. 2 Micron Retains Nand Supply and Demand Forecasts

As in March, Micron predicts that NAND flash memory offerings will grow by 30% and bit demand by 30% in 2019. However, as the NAND market is still oversupplied, Micron claims it is lowering its NAND chip wafer launches by about 10% from 5% previously.

Micron's DRAM share of sales was 64% last year and NAND's share was 31%. the revenue.


Micron's recent outlook for the supply and demand for DRAM and NAND flash memories in 2019 is rising. Source: Micron.

. 3 Prices and margins remain under pressure

After slipping 20% ​​and 20% of DRAM and NAND average selling prices in the February quarter, respectively, Micron declined by approximately 20% over the period and by a percentage in middle-aged Quarter.

These declines drove non-GAAP gross margin (GM) from 50.2% in the February quarter to 39.3% in the last quarter and 60.9% in the prior year. For the August quarter, Micron has set a GM benchmark of 27.5% to 30.5%.

The Company Notes Production Ramps Support Its 1-Year DRAM Manufacturing Process and High-Density 96-Layer 3D NAND Chips Profit margins have increased slightly, and the end result seems to be stronger than during the recent downturn in the industry when Micron reported losses for three-quarters.

. 4 Capital expenditures are expected to be "significantly lower" in fiscal year 2020

After micron cut its 2019 investment budget in December and March, Micron maintains its investment forecast for fiscal year 2019 of approximately $ 9 billion , However, investments in fiscal 2020 are expected to be "significantly lower" as the company seeks to "match" DRAM and NAND supply growth with its expectations for demand growth.

For comparison, it was a consensus that Micron's investment would decline Despite Micron's investment comments, the shares of chip suppliers Applied Materials (AMAT – Get Report) and Lam Research (LRCX – Get Report) rose approximately each in after-hours trading 1% Some hearts in the company's May quarter suggest and DRAM call for prospects. The formal investment guidance for fiscal year 2020 is expected to be released at the time of the Micron quarterly report for August.

. 5 Stock levels continue to increase

Although some of Micron's inventory levels are normalizing, the company's inventories increased 12% sequentially and 36% annually to $ 4.91 billion. The outstanding days of storage rose another 8 consecutive to 151.

"In order to meet expected growth in bit demand, we will be increasing NAND inventories in the 2019 and 2020 calendars," said CFO Dave Zinser at the conference call. "We also expect the DRAM holdings in the 2019 calendar to be above normal levels as supply and demand in the industry works towards a balance."

CEO Sanjay Mehrotra said that Micron expects DRAM inventories to fall and rise again. "a relatively good point" at the end of the 2019 calendar, even though they may not yet be at "optimal levels". He also noted an increased inventory factor in Micron's plans to reduce its capital expenditures in fiscal year 2020, and as Micron's gross margins remain firmly positive, Micron does not anticipate inventory depreciation due to its storage price.

. 6 Micron still delivers "a subset" of products to Huawei

It is not surprising that Huawei's export restrictions in May weighed on last-month's DRAM and NAND sales – the company estimates that quarterly sales will be at least $ 200 Dollars could have been millions higher otherwise – and that the ban will also impact its August-quarter sales. Micron also announced that it has written off approximately $ 40 million of Huawei-related holdings.

However, Mehrotra said that after a review, Micron concluded that it "could legitimately resume the shipment of a subset of current products" and that the company started doing so in the past two weeks. He declined to share how big these supplies are.

. 7 Share Repurchases Slowed

Micron issued $ 157 million for share repurchases in the May quarter, after $ 702 million in the February quarter and $ 1.8 billion in the November quarter.

Zinser reiterated Micron's goal of spending at least 50% of its annual revenue on free cash flow from buybacks. Noteworthy: Although it is likely to pick up as conditions in the industry improve, adjusted free cash flow of $ 1 billion in the February quarter fell to $ 500 million in the Maichi quarter and $ 2.2 billion in the year-ago quarter.

Lam Research is a stake in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio . Would you like to be notified before Cramer buys or sells LRCX? Save 57% with our special offer on July 4th. Become a member of Jim Cramer's Action Alerts PLUS investment club and become a smarter investor! Click here to login!


Source link