Wed, Apr. 1, 4:53 PM
- Though it beat FQ2 estimates, Micron (NASDAQ:MU) has guided in its earnings slides (.pdf) for FQ3 revenue of $3.8B-$4.05B, below a $4.29B consensus. At the same time, a light outlook was expected by many.
- Lifting FQ2 sales: Trade NAND sales rose 12% Q/Q, in spite of guidance for production to be flat to down by a low-single digit %. DRAM sales fell 9%; production guidance was for a high-single to low-double digit drop.
- DRAM and trade NAND ASPs respectively fell 6% and 9% Q/Q, below guidance of flat to down low-single digits. However, DRAM cost/bit fell 4% (better than guidance for a flat cost/bit), and trade NAND cost/bit fell 3% (better than guidance for a mid-single digit increase).
- FQ3 DRAM guidance: High-single digit production growth (20nm transition), high-single digit ASP decline (PC price pressure), low single-digit cost/bit decline. FQ3 trade NAND guidance: Low-single digit production decline, mid-single digit ASP growth, mid-single digit cost/bit growth.
- FQ2 gross margin was 34%, down from FQ1's 36% and flat Y/Y. SG&A spend rose 6% Y/Y to $187M; R&D spend rose 10% to $379M. DRAM was 65% of revenue, NAND 32% (trade NAND 29%), and other products (e.g. NOR flash) 3%.
- Free cash flow was (op. cash flow - capex) was $399M. The FY15 capex budget remains at $3.6B-$4B. Micron ended FQ2 with $6.35B in cash/marketable investments, and $6.7B in debt.
- MU +1.3% AH to $27.48.
- FQ2 results, PR
- Update (5:30PM ET): Micron is now down 1.9% AH.
Wed, Apr. 1, 4:09 PM| 48 Comments
Fri, Mar. 27, 11:48 AM
- After falling 8.3% over the last two days thanks to a major chip stock selloff, Skyworks (NASDAQ:SWKS) is recovering some of its losses in the wake of a $15 Northland Securities target hike to $105. Northland's target was at $80 prior to Skyworks' Jan. 22 FQ1 beat.
- Meanwhile, Citi and Rosenblatt are dueling over near-term smartphone demand. Citi has respectively cut its 2015 and 2016 smartphone unit growth forecasts to 16% and 13% from 19% and 15.5% due to a belief Chinese/emerging markets demand is softer than expected. "We expect a challenging outlook for smartphone companies with high China exposure." With OEMs typically pricing phones in dollars, a strong dollar is seen hurting sales to "price-sensitive markets" in general.
- Rosenlatt, by contrast, says supply chain talks suggest little has changed. "We don’t believe that Taiwan Semi‘s and SanDisk’s forecast cuts are related to the overall smartphone industry ... We believe that Samsung is increasing [Chinese] production from 3 million per month in Q1 to 7-8 million per month in Q2. Qualcomm (NASDAQ:QCOM) and MediaTek are also seeing strong orders from China."
- In addition to Qualcomm/MediaTek, Rosenblatt expects Skyworks, Avago (NASDAQ:AVGO), Synaptics (NASDAQ:SYNA), and Micron (NASDAQ:MU) to benefit from healthy Chinese demand. The firm argued back in December Skyworks and Micron would benefit.
Thu, Mar. 26, 9:22 AM
- Micron (NASDAQ:MU) has dropped to $25.70 premarket after NAND flash rival SanDisk issued its second warning in two months. The company blamed "product qualification delays, lower than expected sales of enterprise products and lower pricing in some areas of the business," while adding it "expects continued impact to its 2015 financial results from these factors," as well as from supply challenges.
- Micron, which posts FQ2 results on April 2, received 28% of its FQ1 (November quarter) revenue from NAND. Shares have fallen to their lowest levels since last May.
- Chip stocks in general sold off hard yesterday - cautious remarks by TSMC about near-term demand may have played a role. Nasdaq futures are currently down 0.7%.
- Update (11:15AM): Micron has erased its premarket losses. Shares are now up 0.7%.
Wed, Mar. 25, 12:03 PM
- Chip stocks are particularly hard-hit (SOXX -3.6%) on a rough day for tech. The Nasdaq is down 1.3%, and the S&P 0.7%. Going into today, good earnings reports and ongoing M&A activity had led the Philadelphia Semi Index to rise 10% from its Jan. 30 close; the index remains up nearly 2x from its fall 2012 lows.
- AMD (AMD -7.2%) is a major decliner following a UBS downgrade. AMD rival/GPU giant Nvidia (NVDA -5.2%) and memory giant Micron (MU -3.7%) are also selling off, as are merger partners NXP (NXPI -3.8%) and Freescale (FSL -3.4%), RF chipmakers Avago (AVGO -5.2%), Skyworks (SWKS -5.3%), and Qorvo (QRVO -7.1%), LED/RF chipmaker Cree (CREE -4.1%), and high-flying video processor developer Ambarella (AMBA -4.3%).
- Other decliners include telecom chipmakers/ARM server CPU vendors Cavium (CAVM -4.8%) and AppliedMicro (AMCC -4.4%), microcontroller vendors Atmel (ATML -3.5%), Cypress (CY -5.5%), and STMicroelectronics (STM -3.5%), voice processor developer Audience (ADNC -3.7%), analog/mixed-signal chipmakers Linear (LLTC -3.7%), Maxim (MXIM -3%), and Intersil (ISIL -3.5%), FPGA maker Lattice (LSCC -3.9%), and mixed-signal/wireless charging IC developer IDT (IDTI -5.4%).
- Chip equipment, IP, and foundry providers are also underperforming. Big decliners include ARM (ARMH -4.4%), KLA-Tencor (KLAC -4.2%), Lam Research (LRCX -5.4%), ASML (ASML -4.1%), TowerJazz (TSEM -4.3%), Mattson (MTSN -4.5%), Ultratech (UTEK -4.7%), and Tessera (TSRA -6.1%). ASML has been downgraded to Hold by Banco Santander.
- TSMC (TSM -4.6%) is among the decliners in spite of a Digitimes report stating the foundry giant's sales are expected to rise 0%-5% Q/Q in Q2 - consensus is for a 2% drop - with strong Apple A8 CPU orders offsetting soft Qualcomm Snapdragon 810 orders.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Wed, Mar. 18, 11:16 AM
- JPMorgan reports Samsung is slowing down the pace of its DRAM capacity ramp. The firm reiterates an Overweight rating and $40 target on Micron (MU +0.8%), whose shares have been hit more than once by Samsung spending fears.
- While Micron edges higher, chip equipment maker Lam Research (LRCX -4.3%), which has considerable DRAM exposure, is selling off. Mattson (MTSN -11.8%), Aixtron (AIXG -1.9%), and Axcelis (ACLS -1.1%), other equipment makers that have DRAM exposure, are also lower. Mattson dived around 11AM after initially posting moderate losses.
- Lam, a David Einhorn favorite, offered upbeat commentary about 2015 DRAM capex on its FQ2 CC (transcript), and noted 30% industry bit growth is expected this year.
- Also: 1) Drexel Hamilton has made upbeat comments about DRAM demand after talking with an unnamed Asian memory maker; the firm expects mobile DRAM demand to restore a supply/demand balance later this year. 2) Jefferies (Buy) has cut its Micron target by $5 to $40, predicting Q1 DRAM pricing weakness will continue into Q2 due soft PC demand, before smartphone demand and "corrective actions on the supply side" lead prices to stabilize.
- Yesterday: Micron drops on RBC target cut
Tue, Mar. 17, 1:05 PM
- Stating he had been "overly aggressive in assuming that the 20-nanometer [DRAM] transition would be faster and smoother than expected," RBC's Doug Freedman (Outperform rating since 2012) has cut his Micron (NASDAQ:MU) target by $4 to $40. Micron cautioned in January the 20nm transition will affect FQ2 (February quarter) DRAM output.
- Freedman adds Micron's efforts to improve NAND flash quality now depend on triple-level cell (TLC) and 3D NAND ramps in 2H15. He's still bullish long-term. "Micron is a longer-term play on the favorable changes in the memory industry given limited risk of oversupply and stronger demand cycles."
- The note comes a day after Deutsche's Sidney Ho (Buy, $40 target) argued Micron's FQ3 guidance is likely to be below consensus when the company reports on April 2. He sees mobile demand, a mix shift towards higher-margin products, and NAND technology improvements providing a lift.
- Separately, Micron has launched new LDDR4 DRAM and NOR flash products for the growing automotive market. The company calls its LDDR4 offering an auto industry first.
- Shares are now 24% below a 52-week high of $37.68. They trade for less than 7x Micron's FY16 (ends Aug. '16) EPS consensus.
Thu, Mar. 12, 9:17 AM
- Intel (NASDAQ:INTC) now expects Q1 revenue of $12.5B-$13.1B, below prior guidance of $13.2B-$14.2B and a $13.7B consensus. Gross margin guidance remains at 60% (+/- 2%), with lower volumes offset by higher ASPs.
- "All other expectations" have been withdrawn - that presumably includes full-year guidance for mid-single digit revenue growth. Guidance will be updated during Intel's April 14 Q1 report.
- The chip giant blames the warning on "weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain." In particular, it thinks "lower than expected Windows XP* refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe," are taking a toll on sales. Server CPU division sales are "meeting expectations."
- Other PC-exposed names are following Intel lower: Microsoft (NASDAQ:MSFT) -2.4% premarket, AMD -2.8%, Nvidia (NASDAQ:NVDA) -2.5%, HP (NYSE:HPQ) -2.3%, Seagate (NASDAQ:STX) -2.5%, Western Digital (NASDAQ:WDC) -2.7%, Micron (NASDAQ:MU) -3.6%.
- Update (11:35AM ET): While Intel is still down over 4%, Micron and Seagate have turned positive, and HP is close to breakeven. Microsoft, Nvidia, and Western Digital have pared their losses, but remain lower.
Wed, Mar. 11, 9:24 AM
- Citing a more favorable valuation and expectations of a favorable 2015 NAND flash supply/demand balance, Goldman's Mark Delaney has upgraded SanDisk (NASDAQ:SNDK) to Conviction Buy, and hiked his target by $6 to $106.
- Delaney: "Low 2H14 NAND [chip equipment] orders imply supply growth will be reasonable for at least the next two quarters (there is a two quarter lag between orders and output), and demand should pick up from a seasonally slow 1Q (aided by higher NAND per phone)." He sees margins (under pressure lately) improving by 400 bps by Q4 with the help of a weaker yen and SanDisk's 15nm NAND production ramp.
- Delaney also sees SanDisk recently-launched enterprise flash storage array potentially driving long-term upside, and thinks concerns about the 2016 impact of 3D NAND adoption are overblown. "While this is a risk to monitor, we expect a reasonable ramp due to high capex requirements (3D requires 2X the tools as 2D), relatively high cost/bit for early 3D chips, and the fact that early 3D output is planned for SSDs (SSDs for OEMs need to be qualified, implying a delay from initial 3D output to volume ramp)."
- Micron (NASDAQ:MU), which fell 3.7% yesterday amid a market selloff and is down 21% YTD, is getting a lift from the upgrade. NAND accounted for 28% of Micron's November quarter sales.
- Morgan Stanley reported positive NAND checks two weeks ago.
Tue, Mar. 3, 1:02 PM
- "Micron is undershipping demand in DRAM, as technology migrations limit supply output," writes Nomura's Romit Shah, downgrading Micron (MU -4.4%) to Neutral and cutting his target by $10 to $30. He also thinks the memory giant "seems behind on technology transitions," and that FQ3 (May quarter) estimates are too high.
- Shah believes Micron has lost a couple hundred bps of DRAM share to Samsung, and expects bigger DRAM/NAND investments in 2016 in order to sustain share. His 2015 and 2016 EPS estimates have respectively been cut by $0.30 and $0.86 to $3.35 and $4.00.
- Shares are below $30 for the first time since Feb. 10. They sold off last week following a downbeat Cleveland Research note and a report that Samsung would be supplying mobile DRAM for the iPhone 6S, but pared their losses after analysts defended the company and Micron offered positive remarks at a Susquehanna conference.
- Nomura upgraded Micron to Buy in Dec. 2013, when shares were at $22.50.
- Update: More details on Nomura's downgrade here, as well as a defense of Micron by Needham.
Tue, Feb. 24, 12:31 PM
- Cleveland Research's Kevin Rottinghaus reports Micron (MU -3.4%) has been "leading pricing down in the channel” for PC DRAM, with contract prices having fallen to $27 in seasonally weak Q1 from $31-$32 in Q4.
- Rottinghaus adds Micron is also cutting prices for (higher-margin) server DRAM, and that demand has dropped due to "negative order revisions." He considers Micron at risk of missing FQ2 (Feb. quarter) and FQ3 estimates.
- Micron guided on Jan. 6 for DRAM prices to be flat to down by a low-single digit % Q/Q in FQ2, while asserting DRAM pricing "remains favorable overall" following the holidays. About a month ago, DRAMeXchange reported DDR3 DRAM spot prices had fallen 3.8% in 2015 due to seasonality. while adding server DRAM demand remained strong.
- Micron remains lower, but has pared its morning losses.
- Earlier: Micron drops following Samsung/Apple DRAM report
- Update: Summit Research and RBC are defending Micron following Cleveland's remarks and the Korea Times' report. RBC on the reported price cuts: "We do not believe that this behavior is unusual, especially towards the end of the quarter."
- Update 2: Micron offered upbeat remarks today about industry demand/pricing at a Susquehanna conference (webcast). Shares closed down 2%.
Tue, Feb. 24, 9:44 AM
- The Korea Times reports Samsung (OTC:SSNLF) has struck deals with Apple and LG to supply DRAM for upcoming phones, with Samsung handling "at least half" of Apple's DRAM needs for the iPhone 6S. Micron (NASDAQ:MU), a major iPhone DRAM supplier, has sold off in response.
- The paper adds the deals are estimated to be worth billions, and that Apple could "ask more from Samsung" depending on the situation. The report comes amid expectations Samsung will manufacture Apple's A9 CPU (expected to go into the 6S), using its 14nm manufacturing process.
- DRAMeXchange recently estimated Samsung had a 46.1% Q4 DRAM share, down from 50.7% in Q3. With the help of iPhone-related orders, Micron's share rose to 23.3% from 19%; SK Hynix's share rose to 28% from 27.6%. Samsung is generally seen as the most aggressive of the big-3 DRAM vendors in terms of growing production.
Tue, Feb. 17, 11:32 AM
- Macquarie has upgraded Micron (MU +2.2%) to Outperform following the memory giant's Friday analyst day. RBC and Jefferies have respectively hiked their targets to $44 and $45.
- Macquarie believes annual EPS of $6 and free cash flow of $5B is possible, and estimates Micron's 2016 free cash flow yield is 13%. Jefferies is upbeat about Micron's tech progress and the margin boost provided by the new Inotera deal.
- Wedbush ($40 target) notes Micron forecasts only 25% DRAM bit supply growth going forward (down from the 33% CAGR seen from 2010-2014), and that (in spite of recent NAND price pressure) it expects NAND supply to be "constrained over the near to long term given diverse end-market demand drivers and complicated 3D transitions." 38% NAND bit supply growth is expected.
- SA author Electric Phred notes Micron suggested its 3D NAND offerings will give it a cost advantage, and thinks Micron and Samsung could have a 3D NAND duopoly.
- Micron's analyst day slides (.pdf)
Tue, Feb. 10, 11:22 AM
- Micron (NASDAQ:MU) has amended its DRAM supply agreement for its Inotera JV (owned in partnership with Taiwan's Nanya). Whereas the prior agreement (signed in 2013) called for Micron to purchase all of Inotera's DRAM output at market prices, the new agreement lets Micron buy Inotera's output at "a discount from market prices" for the rest of 2015.
- Starting in 2016, a new agreement kicks in under which "the price for DRAM products sold to Micron is based on a formula that equally shares margin between Inotera and Micron." That deal has an initial 2-year term, and "contemplates negotiations in late 2016 with respect to a two-year extension, and annual negotiations thereafter with respect to successive one-year extensions."
- Shares have surged towards $30. The news comes a day after Jefferies (Buy, $42 target) argued Micron's shares have been pressured by 7 "myths." Among them: Micron is struggling to ramp 20nm DRAM output, Samsung's investments will drive down DRAM prices, 3D NAND flash doesn't work, and Micron should trade at a discount due to current earnings being unsustainable.
- The firm expects Micron's analyst day (this Friday) to be a positive catalyst.
Tue, Jan. 27, 7:27 PM
- Micron (NASDAQ:MU), SanDisk (NASDAQ:SNDK), and InvenSense (NYSE:INVN) have joined Cirrus Logic, NXP, and several RF chipmakers in rising AH in response to Apple's FQ1 beat and stronger-than-expected iPhone sales print (74.5M units, +46% Y/Y).
- Micron became an iDevice mobile DRAM supplier through the Elpida acquisition. SanDisk has been both an iPhone NAND flash and MacBook SSD supplier, but there have been reports the company's recent woes are partly due to losing Apple as an SSD client. InvenSense's motion sensors were designed into the iPhone 6/6 Plus.
- MU +1.3% AH to $30.02. SNDK +1.3% to $79.99. INVN +1.7% to $15.19. InvenSense reports on Thursday. Micron was hit hard earlier today by Microsoft's FQ2 Windows figures and related commentary.
Tue, Jan. 27, 12:35 PM
- Micron (MU -3.6%), Nvidia (NVDA -3.4%), Seagate (STX -3.7%), and Western Digital (WDC -3.4%) have joined Intel and HP among the ranks of PC-exposed names off sharply in response to Microsoft's results and guidance. The Nasdaq is down 1.5%.
- The 13% Y/Y drops reported by Microsoft for Windows OEM Pro and non-Pro license revenue are getting a lot of attention, as is the fact Microsoft partly blamed the former on slowing business PC demand (also reported by IDC).
- Microsoft also stated non-Pro revenue was hurt by a mix shift towards cheaper PCs (typically feature cheaper processors, integrated GPUs, less DRAM, and smaller hard drives) for which Windows license fees are lower.
- Seagate and Western both tumbled yesterday due to the former's soft calendar Q1 guidance. Western reports after the close.
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