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Micron Technology, Inc. (MU - Free Report) reported fourth-quarter fiscal 2018 non-GAAP earnings per share of $3.53, beating the Zacks Consensus Estimate of $3.32 and higher than the year-ago quarter’s figure of $2.02 per share.
Micron’s revenues in the reported quarter climbed around 38% on a year-over-year basis to $8.44 billion and came ahead of the Zacks Consensus Estimate of $8.25 billion.
Strong demand for data centers and cloud computing led to growth in sales of DRAM and NAND solutions. Mobile, automotive, industrial, IoT also represent significant growth opportunity for the company.
Revenue Details
Shipment sales from DRAM products, which accounted for 70% of total revenues during the quarter, were up a 47%,on a year-over-year basis and 7% on a sequential basis. The company recorded mid to upper single-digit percentage rise in shipment quantities while average selling price (ASP) remained flat sequentially.
Sales from NAND products, which accounted for 26% of total revenues, marked 21% year-over-year and 15% sequential growth. While NAND ASP declined in the mid-teens percentage range, shipment quantities grew in the mid-30 range.
Business unit wise, revenues of the computing and networking business (CMBU) unit surged 53% from the year-ago quarter to $4.4 billion. Sequentially, it marked 9% growth. The company’s cloud server and graphics memory product sales more than doubled year over year.
Notably, NVIDIA (NVDA - Free Report) chose Micron as a lead partner for supplying GDDR6 graphics DRAM chips for its RTX-series gaming GPUs. Moreover, Micron anticipates strong growth in GDDR6 shipments in fiscal 2019 to be a tailwind.
Revenues from the Mobile Business Unit (MBU) reached a record level of $1.9 billion, registering year-over-year jump of 60% and sequential increase of 7% on the back of multichip packages and managed NAND products.
In the quarter, the company shipped its first high-performance UFS managed NAND products. It expects NAND to be a key growth area in fiscal 2019.
Management believes growing demand for new camera and digital features, utilizing machine learning, will drive DRAM and NAND content in mobile devices in 2019.
The Embedded business unit reported revenues of $923 million, up 12% from the year-ago quarter and 3% from the previous quarter backed by industrial and automotive markets.
Revenues from the Storage Business Unit (SBU), which comprises SSD NAND components and 3D XPoint, came in at $1.2 billion, down 4% on a year-over-year basis but up 9% sequentially. Success in the SATA SSD market drove overall SSD revenues.
Management believes that shift toward NVMe SSDs provides future growth opportunity for the company. However, the company anticipates total shares in SSDs to remain flattish in 2019.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron’s non-GAAP gross profit registered 64.6% increase from the prior-year period and came in at $5.18 billion. Non-GAAP gross margin advanced from 51.3% to 61.4%.
Micron’s non-GAAP operating income grew 74.4% to $4.439 billion. Non-GAAP operating margin improved to 52.6% from 41.5% reported in the year-ago quarter.
The impressive year-over-year improvement in gross margin was chiefly driven by better mix of high-value products and efficient cost management.
Balance Sheet and Cash Flow
The company exited the quarter with cash and short-term investments of $6.802 billion compared with $7.071 billion at the end of the previous quarter.
Micron’s long-term debt declined to $3.78 billion from $5.89 billion in the prior quarter.
The company generated operating cash flow of $5.16 billion and adjusted free cash flow of $3.1 billion during the reported quarter.
Outlook
Micron anticipates CPU shortages in the client compute market and inventory adjustments with some customers to impact upcoming results. Moreover, U.S. tariff of 10% on $200 billion imports from China is likely to keep gross margin under pressure.
Taking all these factors into consideration, the company provided a weak outlook for first-quarter fiscal 2019. Micron projects revenues in the range of $7.9-$8.3 billion.
Non-GAAP gross margin is projected between 57% and 60%. Operating expenses on a non-GAAP basis are likely to be $750 million (+/- $25 million). The company expects non-GAAP earnings per share to be roughly $2.95 (+/- 7 cents).
Furthermore, Micron expects its capital expenditure in fiscal 2019 to remain around $10.5 billion (+/- 5%). The company anticipates 25% of capital spending for facility expansion and upgrades to aid technology transitions.
Micron expects DRAM bit growth to be around 20% in 2019 and expects its shipment growth to be in line with the industry in both 2018 and 2019.
Micron anticipates the company’s NAND bit growth to be in line with industry’s growth of 45% in 2018. For 2019, the company projects its own bit shipments to be higher than that of industry’s 35% to 40%. However, the company expects the increase in supply to keep NAND pricing under pressure in 2019.
Micron also announced a $10 billion share buyback. For the fiscal first quarter, the company plans to spend at least $1.5 billion on programmatic repurchases and an additional amount for “opportunistic repurchases”.
Zacks Rank and Stocks to Consider
Currently, Micron has a Zacks Rank #5 (Strong Sell).
Long-term earnings growth for Radware and Vishay is projected to be 19% and 9%, respectively.
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Micron (MU) Q4 Earnings Beat Estimates, Guidance Disappoints
Micron Technology, Inc. (MU - Free Report) reported fourth-quarter fiscal 2018 non-GAAP earnings per share of $3.53, beating the Zacks Consensus Estimate of $3.32 and higher than the year-ago quarter’s figure of $2.02 per share.
Micron’s revenues in the reported quarter climbed around 38% on a year-over-year basis to $8.44 billion and came ahead of the Zacks Consensus Estimate of $8.25 billion.
Strong demand for data centers and cloud computing led to growth in sales of DRAM and NAND solutions. Mobile, automotive, industrial, IoT also represent significant growth opportunity for the company.
Revenue Details
Shipment sales from DRAM products, which accounted for 70% of total revenues during the quarter, were up a 47%,on a year-over-year basis and 7% on a sequential basis. The company recorded mid to upper single-digit percentage rise in shipment quantities while average selling price (ASP) remained flat sequentially.
Sales from NAND products, which accounted for 26% of total revenues, marked 21% year-over-year and 15% sequential growth. While NAND ASP declined in the mid-teens percentage range, shipment quantities grew in the mid-30 range.
Business unit wise, revenues of the computing and networking business (CMBU) unit surged 53% from the year-ago quarter to $4.4 billion. Sequentially, it marked 9% growth. The company’s cloud server and graphics memory product sales more than doubled year over year.
Notably, NVIDIA (NVDA - Free Report) chose Micron as a lead partner for supplying GDDR6 graphics DRAM chips for its RTX-series gaming GPUs. Moreover, Micron anticipates strong growth in GDDR6 shipments in fiscal 2019 to be a tailwind.
Revenues from the Mobile Business Unit (MBU) reached a record level of $1.9 billion, registering year-over-year jump of 60% and sequential increase of 7% on the back of multichip packages and managed NAND products.
In the quarter, the company shipped its first high-performance UFS managed NAND products. It expects NAND to be a key growth area in fiscal 2019.
Management believes growing demand for new camera and digital features, utilizing machine learning, will drive DRAM and NAND content in mobile devices in 2019.
The Embedded business unit reported revenues of $923 million, up 12% from the year-ago quarter and 3% from the previous quarter backed by industrial and automotive markets.
Revenues from the Storage Business Unit (SBU), which comprises SSD NAND components and 3D XPoint, came in at $1.2 billion, down 4% on a year-over-year basis but up 9% sequentially. Success in the SATA SSD market drove overall SSD revenues.
Management believes that shift toward NVMe SSDs provides future growth opportunity for the company. However, the company anticipates total shares in SSDs to remain flattish in 2019.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Technology, Inc. Price, Consensus and EPS Surprise | Micron Technology, Inc. Quote
Margins
Micron’s non-GAAP gross profit registered 64.6% increase from the prior-year period and came in at $5.18 billion. Non-GAAP gross margin advanced from 51.3% to 61.4%.
Micron’s non-GAAP operating income grew 74.4% to $4.439 billion. Non-GAAP operating margin improved to 52.6% from 41.5% reported in the year-ago quarter.
The impressive year-over-year improvement in gross margin was chiefly driven by better mix of high-value products and efficient cost management.
Balance Sheet and Cash Flow
The company exited the quarter with cash and short-term investments of $6.802 billion compared with $7.071 billion at the end of the previous quarter.
Micron’s long-term debt declined to $3.78 billion from $5.89 billion in the prior quarter.
The company generated operating cash flow of $5.16 billion and adjusted free cash flow of $3.1 billion during the reported quarter.
Outlook
Micron anticipates CPU shortages in the client compute market and inventory adjustments with some customers to impact upcoming results. Moreover, U.S. tariff of 10% on $200 billion imports from China is likely to keep gross margin under pressure.
Taking all these factors into consideration, the company provided a weak outlook for first-quarter fiscal 2019. Micron projects revenues in the range of $7.9-$8.3 billion.
Non-GAAP gross margin is projected between 57% and 60%. Operating expenses on a non-GAAP basis are likely to be $750 million (+/- $25 million). The company expects non-GAAP earnings per share to be roughly $2.95 (+/- 7 cents).
Furthermore, Micron expects its capital expenditure in fiscal 2019 to remain around $10.5 billion (+/- 5%). The company anticipates 25% of capital spending for facility expansion and upgrades to aid technology transitions.
Micron expects DRAM bit growth to be around 20% in 2019 and expects its shipment growth to be in line with the industry in both 2018 and 2019.
Micron anticipates the company’s NAND bit growth to be in line with industry’s growth of 45% in 2018. For 2019, the company projects its own bit shipments to be higher than that of industry’s 35% to 40%. However, the company expects the increase in supply to keep NAND pricing under pressure in 2019.
Micron also announced a $10 billion share buyback. For the fiscal first quarter, the company plans to spend at least $1.5 billion on programmatic repurchases and an additional amount for “opportunistic repurchases”.
Zacks Rank and Stocks to Consider
Currently, Micron has a Zacks Rank #5 (Strong Sell).
A couple of better-ranked stocks in the broader Computer and Technology sector are Radware (RDWR - Free Report) and Vishay Intertechnology (VSH - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Radware and Vishay is projected to be 19% and 9%, respectively.
Looking for Stocks with Skyrocketing Upside?
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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