- Micron (NASDAQ:MU) received plenty of estimate cuts after providing soft FQ2 revenue guidance to go with mixed FQ1 results, but no downgrades arrived. Shares closed down 2.3% after falling as much as 6% in AH trading yesterday; a broad market rally helped limit the damage.
- On the CC (transcript), Micron noted technology transitions, including a migration to a 20nm manufacturing process, will affect FQ2 DRAM output. CEO Mark Durcan: "I think we will see as we move out in time, a get back to sort of a more normal bit growth rate quarter-over-quarter ... when you deploy technology sometimes there is disruptions in manufacturing."
- President Mark W. Adams stated DRAM pricing "remains favorable overall" post-holidays. Softness was seen in NAND pricing in FQ1 and also December, but there are some signs of improved pricing lately. A NAND competitor (almost certainly Samsung) has increased its supply to third parties, pressuring industry margins.
- In the Q&A, analysts were generally more concerned about NAND (28% of revenue) than DRAM (68% of revenue). Micron insisted recent NAND pressures are temporary, and that it expects better performance later in the year with the help of rising tri-level cell (TLC) NAND output. Samsung has been busy ramping 3D NAND output.
-
Stifel (Buy) defends management's DRAM strategy. "Previously, slowing production would result in potential market share losses. Today, DRAM companies are focused on maintaining profitability rather than market share."
- Shares currently go for 7.7x FY16E (ends Aug. '16) EPS.
-
FQ1 results, guidance/details