Micron issues healthy guidance; strong NAND bit growth expected


Micron (MU) expects FQ4 revenue of $4B-$4.2B vs. a $4.06B consensus.

DRAM bit growth was flat Q/Q in FQ3, and ASP down 2%; Micron had guided for each to show a low-single digit % drop.

Trade NAND bit growth (inc. 3rd-party purchases) was -6%, and ASP was flat. Guidance was for a high-single digit % production drop, and a low-singe digit % ASP drop.

DRAM cost/bit fell 3%, and NAND cost/bit was flat; both figures are in-line with guidance.

FQ4 DRAM guidance: Low-single digit % bit growth, flat ASP, low-single digit cost/bit decline. Trade NAND guidance: Low-to-mid teens % bit growth (aided by mobile product launches), low-to-mid single digit % ASP decline, flat cost/bit.

DRAM made up 69% of FQ3 revenue, and NAND 28%. Gross margin was 34%, flat Q/Q and up from 24% a year ago.

Operating cash flow was $1.46B, and capex $576M. FY14 capex guidance is at $2.8B-$3.2B.

MU -1.1% AH following a big spring rally.

FQ3 results, PR, earnings slides (.pdf)

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Comments (17)
  • D. Appleton & Company
    , contributor
    Comments (706) | Send Message
     
    It'll have a P/E of 9 soon. What a joke.
    23 Jun 2014, 04:51 PM Reply Like
  • Dividend Growth Jedi
    , contributor
    Comments (479) | Send Message
     
    P/E is just one metric not the end all be all. Also stocks that get a low pe you have to figure out why they get them. Cyclical companies..companies with only short term growth..companies with high capex and input costs..companies with concentrated revenue etc

     

    Sometimes I feel the pe is a misunderstood metric. It is literally how many years it would take to get your money back after one years earnings if 100% was paid out. Low does not always mean cheap and high does not always mean expensive. Not trying to lecture just saying

     

    Besides mu seens to have good long term prospects..day to day swings dont matter.
    23 Jun 2014, 05:00 PM Reply Like
  • D. Appleton & Company
    , contributor
    Comments (706) | Send Message
     
    On what planet is a TTM P/E of 10x and a forward P/E of single digits reasonable in this market and sector?

     

    Planet Xenon?
    23 Jun 2014, 05:03 PM Reply Like
  • Dividend Growth Jedi
    , contributor
    Comments (479) | Send Message
     
    Youre still looking to close.

     

    Check the earnings history. Check the price to book. What would happen to it in a bad economy (and has happened). How wide is their moat and what is the longevity of their products.. Tech changes quick
    23 Jun 2014, 05:16 PM Reply Like
  • aow
    , contributor
    Comments (150) | Send Message
     
    Ya the price to book is far from stellar. Also the vast majority of notable stocks trading at low P/Es pay divis, MU does not.
    23 Jun 2014, 05:21 PM Reply Like
  • abdullah999
    , contributor
    Comments (895) | Send Message
     
    @Emmanuel - your comments are just hilarious! I would suggest that if you think Micron is ridiculously cheap, you buy more. I think the issue you're facing may have something to do with your disclosure:

     

    "Holding Micron $MU tel:07/03/2014 31.50 call options going into earnings. Strong guidance and margins should fuel P/E expansion."

     

    Timing short term stock price movements is very difficult and, in my opinion, futile. Cheap can always get cheaper (and vice versa). As Einhorn recently wrote, twice a silly price is not twice as silly; it's still just silly.

     

    @Dividend Growth Jedi has some real wisdom in his comments for you. Given you are trying to compare $MU's P/E ratio to $AEP, I'd spend some time studying it. Good luck!
    23 Jun 2014, 08:22 PM Reply Like
  • D. Appleton & Company
    , contributor
    Comments (706) | Send Message
     
    @abdullah: I have 31 strike calls for 7/11 too. The P/E is so cheap right now it doesn't make any sense. Micron just guided $4.2B revenue for Q4 with 34% margins. Micron is bringing in half the operating cash flow of Qualcomm, which trades at a $130B capitalization. I'm going to need a barrage of upgrades next week. It sucks, because the same exact scenario played out for me last quarter. I was holding shares at the time, not options, so it was a little less painful.

     

    $33-34 target for 1st week of July will make me whole.
    23 Jun 2014, 08:37 PM Reply Like
  • cooples03
    , contributor
    Comments (89) | Send Message
     
    Ok, first off P/B doesn't even matter with MU. If you read into the buying of Elpida you would know that the way that they accounted for the purchase of Elpida (bargain purchase accounting) significantly undervalued assets like crazy. So yea, you won't get me on saying the P/B isn't stellar.
    As to the company and its longevity; not only do they have the most technological advanced products right now (which have won numerous awards at technology conferences), they are also frontrunners in leading technology. Memory doesn't change THAT fast. 3D is far from becoming a mainstream product. Until then, MU will continue to dominate the DRAM field within the oligopoly that it sits in.
    Micron is a completely different company than it was years ago and it sits amongst an industry that has done a complete 180 degree turn in regards as to how everyone operates their business and controls supply/demand.
    23 Jun 2014, 10:13 PM Reply Like
  • Grant Payne
    , contributor
    Comments (337) | Send Message
     
    Earnings beat, strong guidance, still down...wow lol
    23 Jun 2014, 04:54 PM Reply Like
  • baozebub
    , contributor
    Comments (361) | Send Message
     
    Guys, this is just AH trading. It's all the traders and shorts. Wait until regular session before you get disappointed by post-ER price.
    23 Jun 2014, 05:00 PM Reply Like
  • drevulphd
    , contributor
    Comments (7) | Send Message
     
    if you look back the last few quarters MU was usually sluggish after a good report then it took off.
    23 Jun 2014, 05:46 PM Reply Like
  • shashi.24
    , contributor
    Comments (20) | Send Message
     
    Besides this is not a momo stock
    23 Jun 2014, 06:23 PM Reply Like
  • Tomal
    , contributor
    Comments (2477) | Send Message
     
    MU is definitely momo stock. It is quit volatile. Another market correction and MU will once again go back to early $20s.
    23 Jun 2014, 09:07 PM Reply Like
  • thejacadagroup
    , contributor
    Comments (92) | Send Message
     
    An analysis of past beats show that MU most of the time falls after the beat! This analysis was done on SA...
    23 Jun 2014, 09:16 PM Reply Like
  • khlim115
    , contributor
    Comments (462) | Send Message
     
    The DRAM and NAND are commoditized. MU is no longer a growth play. They should start paying dividends, but they are burning through their free cash every quarter--a bit sad.
    23 Jun 2014, 10:51 PM Reply Like
  • Randal James
    , contributor
    Comments (4406) | Send Message
     
    Khlim

     

    What you say about commoditization is reasonably true but, like so many pearls of wisdom, there are caveats. Diamonds are commoditized but, as there are so few sources, prices and margins are good. When economic doldrums hit that decrease demand, they unilaterally decrease production or move to build inventory.

     

    If you think of the astronomical amount of memory that is being allocated to phones and other mobile devices, demand has NEVER been stronger yet the number of players is smaller and unlike other eras, not everyone is rushing to build more. There is a reason for that - new fabs with the latest technology cost in the billions. It is a moat that doesn't preclude other firms from building one but they have to have a burning desire and access to top engineering resources, patents that someone else already has, etc.

     

    Right now, demand is outstripping supply and not because sales are brisk at retail (they aren't) but instead because memory is dramatically increasing in consumer goods and at the enterprise level data farms are moving from disc storage to quicker forms. Not for everything, but for anything where speed is critical it is stored on DRAM. All of this cloud stuff is memory. Netflix is memory.

     

    So the notion that the goose is cooked fails. It will be hard for producers to ramp production at the same rate as demand, so margins should stay at these abnormally high levels. Even computers, bless their increasingly tiny little hearts, are showing increasing sales AND people opting for DRAM hard drives.
    24 Jun 2014, 01:48 AM Reply Like
  • seeking betta
    , contributor
    Comments (715) | Send Message
     
    Gonna mildly tank until the MM bleed the weekly call options - just like last time. Then will rise.
    23 Jun 2014, 11:03 PM Reply Like
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