We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Micron (MU) Q1 Earnings Match Estimates, Revenues Surpass
Read MoreHide Full Article
Micron Technology, Inc. (MU - Free Report) reported first-quarter fiscal 2020 non-GAAP earnings per share of 48 cents, in line with the Zacks Consensus Estimate but lower than the year-ago quarter’s $2.97.
Meanwhile, Micron’s revenues of $5.144 billion in the quarter under review exceeded the Zacks Consensus Estimate of $5.028 billion but dropped around 35% on a year-over-year basis.
Although the company suffered a drastic year-over-year fall in revenues and earnings, management’s positive commentary on the company’s performance beyond the current quarter is making investors hopeful.
Management expects the seasonally weak fiscal second quarter to hit rock bottom in its financial downturn. The company’s performance is expected to start improving in fiscal third quarter with continued recovery in the second half of 2020.
Increasing mix of high-value solutions, enhancement in customer engagement and improvement in cost structure are positives. Growing demand from cloud-computing providers and acceleration in 5G adoption make authorities hopeful. Deceleration in DRAM price declines and improvements in NAND pricing are a tailwind.
Talking about its business with Huawei, Micron informed that it has obtained licenses for supporting various Huawei products that are not subject to Export Administration Regulations and Entity List restrictions. Moreover, it has also been qualified for new products to back Huawei's mobile and server businesses.
However, the company alerted that “it will take some time before the qualifications are completed and contribute to revenues.”
Revenue Details
DRAM revenues of $3.5 billion, accounting for 67% of total revenues in the quarter under discussion, plunged 41% year over year. However, it inched up 2% sequentially. With less customer inventories, bit shipments rose nearly 10% sequentially and in the mid-20 percent range year over year. On a sequential basis, ASP declined in the upper-single-digit percent range. DRAM revenues included $435 million of revenues from MCPs and SSDs.
NAND revenues of $1.4 billion, representing 28% of the total top line, were down 14% on a year-over-year basis but up 18% quarter over quarter. While NAND ASP increased in the low single-digit’s percentage band, shipment quantities improved in mid-teens percent range sequentially. Shipments grew in the mid-30% range year over year.
Business unit wise, revenues of the computing and networking business (CNBU) unit deteriorated 45% from the year-ago quarter and 4% sequentially to $2 billion. Higher volumes and moderating decline in ASP drove sequential growth.
Revenues from the Mobile Business Unit (MBU) of $1.5 billion softened 34% on a year-over-year basis. The metric increased 4% sequentially though. Strong growth in MCP revenues, backed by nearly 50% sequential growth in DRAM and NAND bits, was a tailwind.
The Embedded Business Unit revenues logged $734 million, down 21% from the year-ago quarter but up 4% from the previous quarter. Content growth in the automotive market drove sequential revenues.
Revenues from the Storage Business Unit (SBU) comprising SSD NAND components and 3D XPoint totaled $968 million, down 15% year over year but up 14% sequentially. SSD volume expansion and ASP increases drove sequential growth.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron’s non-GAAP gross profit of $1.405 billion slumped 69.9% from the prior-year period. Non-GAAP gross margin fell from 59% in the year-ago quarter to 27.3%. Underutilization charges at the Lehi Lab had a negative impact of nearly 240 basis points.
Micron’s non-GAAP operating income of $594 million declined from $3.887 billion in the year-ago quarter. Non-GAAP operating margin contracted from 49% to 12%. Higher R&D expenses incurred by the company to expand its product portfolio were a downside.
Balance Sheet and Cash Flow
The company exited the quarter with cash and short-term investments of $7.588 billion compared with $7.955 billion at the end of the preceding quarter.
Micron’s long-term debt increased to $6.371 billion from $4.541 billion in the prior quarter.
The company generated operating cash flow of $2.01 billion compared with $2.2 billion in the previous quarter. Adjusted free cash flow during the reported quarter was $80 million, down from $260 million in the sequential quarter.
The company repurchased 1.1 million shares worth $50 million in the fiscal first quarter.
Guidance for Q2
For the second quarter of fiscal 2020, the company anticipated revenues of $4.5-$4.8 billion.
For the fiscal second quarter, Micron expects non-GAAP gross margin of 27% (+/- 150 bps). Higher underutilization charges due to contracted production volumes are likely to be a dampener.
Operating expenses on a non-GAAP basis are likely to be $825 million (+/- $25 million).
Earnings per share are anticipated to be 35 cents (+/- 6 cents).
DRAM and NAND Outlook
For calendar 2019, DRAM bit demand will likely climb around 20%, up from mid-teens’ percentage growth predicted earlier.
However, for calendar 2020, Micron expects the industry to see bit demand growth in the mid-teens percentage range, down from the prior outlook of high-teens to 20% range. Normalization of inventory builds by Chinese customers will impact DRAM bit demand growth in 2020.
Rising DRAM demand from cloud, enterprise, smartphone, graphics card and automotive clients is an upside. However, Intel’s CPU shortages persist as a headwind in the PC DRAM market.
For 2019, industry’s NAND bit demand is assumed to grow in the mid-40% range from the past forecast of low-to-mid 40s growth. For 2020, the company expects the industry’s NAND bit demand to grow in the high 20s to low 30 % band with supply growth falling below demand due to industry capex cuts. Rising attach rates and average capacities for solid-state drive (SSD) are a boon. Improving pricing trends for SSDs are a positive too.
Long-term earnings growth rate for Keysight, Fortinet and CommVault Systems is currently estimated at 9.1%, 14% and 10%, respectively.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Micron (MU) Q1 Earnings Match Estimates, Revenues Surpass
Micron Technology, Inc. (MU - Free Report) reported first-quarter fiscal 2020 non-GAAP earnings per share of 48 cents, in line with the Zacks Consensus Estimate but lower than the year-ago quarter’s $2.97.
Meanwhile, Micron’s revenues of $5.144 billion in the quarter under review exceeded the Zacks Consensus Estimate of $5.028 billion but dropped around 35% on a year-over-year basis.
Although the company suffered a drastic year-over-year fall in revenues and earnings, management’s positive commentary on the company’s performance beyond the current quarter is making investors hopeful.
Management expects the seasonally weak fiscal second quarter to hit rock bottom in its financial downturn. The company’s performance is expected to start improving in fiscal third quarter with continued recovery in the second half of 2020.
Increasing mix of high-value solutions, enhancement in customer engagement and improvement in cost structure are positives. Growing demand from cloud-computing providers and acceleration in 5G adoption make authorities hopeful. Deceleration in DRAM price declines and improvements in NAND pricing are a tailwind.
Talking about its business with Huawei, Micron informed that it has obtained licenses for supporting various Huawei products that are not subject to Export Administration Regulations and Entity List restrictions. Moreover, it has also been qualified for new products to back Huawei's mobile and server businesses.
However, the company alerted that “it will take some time before the qualifications are completed and contribute to revenues.”
Revenue Details
DRAM revenues of $3.5 billion, accounting for 67% of total revenues in the quarter under discussion, plunged 41% year over year. However, it inched up 2% sequentially. With less customer inventories, bit shipments rose nearly 10% sequentially and in the mid-20 percent range year over year. On a sequential basis, ASP declined in the upper-single-digit percent range. DRAM revenues included $435 million of revenues from MCPs and SSDs.
NAND revenues of $1.4 billion, representing 28% of the total top line, were down 14% on a year-over-year basis but up 18% quarter over quarter. While NAND ASP increased in the low single-digit’s percentage band, shipment quantities improved in mid-teens percent range sequentially. Shipments grew in the mid-30% range year over year.
Business unit wise, revenues of the computing and networking business (CNBU) unit deteriorated 45% from the year-ago quarter and 4% sequentially to $2 billion. Higher volumes and moderating decline in ASP drove sequential growth.
Revenues from the Mobile Business Unit (MBU) of $1.5 billion softened 34% on a year-over-year basis. The metric increased 4% sequentially though. Strong growth in MCP revenues, backed by nearly 50% sequential growth in DRAM and NAND bits, was a tailwind.
The Embedded Business Unit revenues logged $734 million, down 21% from the year-ago quarter but up 4% from the previous quarter. Content growth in the automotive market drove sequential revenues.
Revenues from the Storage Business Unit (SBU) comprising SSD NAND components and 3D XPoint totaled $968 million, down 15% year over year but up 14% sequentially. SSD volume expansion and ASP increases drove sequential growth.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote
Margins
Micron’s non-GAAP gross profit of $1.405 billion slumped 69.9% from the prior-year period. Non-GAAP gross margin fell from 59% in the year-ago quarter to 27.3%. Underutilization charges at the Lehi Lab had a negative impact of nearly 240 basis points.
Micron’s non-GAAP operating income of $594 million declined from $3.887 billion in the year-ago quarter. Non-GAAP operating margin contracted from 49% to 12%. Higher R&D expenses incurred by the company to expand its product portfolio were a downside.
Balance Sheet and Cash Flow
The company exited the quarter with cash and short-term investments of $7.588 billion compared with $7.955 billion at the end of the preceding quarter.
Micron’s long-term debt increased to $6.371 billion from $4.541 billion in the prior quarter.
The company generated operating cash flow of $2.01 billion compared with $2.2 billion in the previous quarter. Adjusted free cash flow during the reported quarter was $80 million, down from $260 million in the sequential quarter.
The company repurchased 1.1 million shares worth $50 million in the fiscal first quarter.
Guidance for Q2
For the second quarter of fiscal 2020, the company anticipated revenues of $4.5-$4.8 billion.
For the fiscal second quarter, Micron expects non-GAAP gross margin of 27% (+/- 150 bps). Higher underutilization charges due to contracted production volumes are likely to be a dampener.
Operating expenses on a non-GAAP basis are likely to be $825 million (+/- $25 million).
Earnings per share are anticipated to be 35 cents (+/- 6 cents).
DRAM and NAND Outlook
For calendar 2019, DRAM bit demand will likely climb around 20%, up from mid-teens’ percentage growth predicted earlier.
However, for calendar 2020, Micron expects the industry to see bit demand growth in the mid-teens percentage range, down from the prior outlook of high-teens to 20% range. Normalization of inventory builds by Chinese customers will impact DRAM bit demand growth in 2020.
Rising DRAM demand from cloud, enterprise, smartphone, graphics card and automotive clients is an upside. However, Intel’s CPU shortages persist as a headwind in the PC DRAM market.
For 2019, industry’s NAND bit demand is assumed to grow in the mid-40% range from the past forecast of low-to-mid 40s growth. For 2020, the company expects the industry’s NAND bit demand to grow in the high 20s to low 30 % band with supply growth falling below demand due to industry capex cuts. Rising attach rates and average capacities for solid-state drive (SSD) are a boon. Improving pricing trends for SSDs are a positive too.
Zacks Rank & Stocks to Consider
Micron currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Keysight Technologies Inc. (KEYS - Free Report) , Fortinet, Inc. (FTNT - Free Report) and CommVault Systems, Inc. (CVLT - Free Report) , each 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 rate for Keysight, Fortinet and CommVault Systems is currently estimated at 9.1%, 14% and 10%, respectively.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>