Micron Technology, Inc. Earnings beat but weak outlook sending after-hours -5%.
Why? Let’s take a look at what happened.
❔ Are you buying this pullback?
✔️ Revenue $6.06B vs $5.9B expected
✔️ EPS $1.08 vs $0.99 expected
When the numbers first came out, the stock jumped from $50.71 to $52.13 on earnings beat
Although on the conference call, it dropped as low as $49.72 (around -5%)
👉 Let us try to investigate why
❌ Gross margin 34.1% vs 35.1% expected
Overall, the final product is more expensive to produce
❌ Operating margin 19.1% vs 20.5% expected
The company is making less money for each sale, after paying all costs of production excluding taxes
✔️ DRAM 72% total revenue, ⬆ 66% last quarter ⬆ 29% YoY
What is is?
❌ NAND 25% total revenue, ⬇ 31% last quarter ⬇ 27% YoY
What it is?
Non-volatile persistence storage, used in SDDs, USB and SD cards
✔️ record production from assembly and test facilities in Xi’an, Taiwan, and Singapore
✔️ 3/4 team members back on-site including manufacturing operations
The company states that its good positions to win in the 5G era with an industry-leading portfolio
Expected rebound smartphone unit volumes 21 calendar year with robust 5G driven, driven average capacity growth across DRAM and NAND
Working from Home
So… although NAND sales are down, the 5G and WFH story is actually pretty good, no?
The stock market is currently trying to understand the next trends in this “almost”-post-pandemic world, and this is MU forecast
🏆 Smartphone, auto, and consumer end-markets have started to recover, and we see further demand improvements ahead
🏆 Cloud and laptop demand continues to be healthy, supported by the work from home and shop from home trends; gaming demand is robust
❌❌❌ Short-term outlook has weakened; enterprise demand weakened due to lower IT spending and somewhat higher inventories at some customers
❌ Halted shipments to Huawei on Sept 14; expect to offset the impact by end of FQ2-21
📉 I believe traders will try to capitalize on the short-term drawback, although I really feel very bullish in the long term as Micron is the market leader on NAND and DRAM.
How do you feel about the company?
Sources: Seeking Alpha, Investing.com, MU Investors page
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