Micron Results Are Out...

Q2 EPS of $2.82 beats by $0.08.
Revenue of $7.35B (+58.1% Y/Y) beats by $70M.

They beat street expectations and their preliminary announcement AND they guided up (although I know a few like ElectricPhred were aiming for $3 EPS).

They are facing the usual post results sell off as everyone thinks this must be the end of the party again and just don’t get this is a multi year rave not a one night house party. Tariff worries probably aren’t helping much together with a supplier maintenance issue. Nonetheless there were a couple of upgrades going into the earnings report.

I was actually a little concerned about the tariff situation until I read the transcript…
They are announcing a ton of roadmap innovation that helps differentiate and lower costs further, they announced customer qualifications and introductions progress and the news on demand growth just keeps extending out. New CFO is also on board.

"For the second fiscal quarter, revenues were $7.35 billion, up 8% from the prior quarter and 58% from the prior year. The overall strength reflects a positive business environment and broad-based demand for our memory and storage solutions, particularly for cloud, enterprise and mobile markets.

Non-GAAP gross margins for the quarter were 58.4%, up 300 basis points from the prior quarter and up from 38.5% in the prior year. Our ability to drive a richer mix of high-value products, strong execution on our cost goals and favorable market conditions contributed to the gross margin expansion. Non-GAAP operating margin was 49%, up from 46% in the prior quarter and 25% in the prior-year period."

“Our non-GAAP earnings per share were $2.82, up 15% from the prior quarter and up over 200% from the prior year. As a result of our record performance, we generated $4.3 billion in cash from operations, which represented 59% of revenue. This compares to $1.8 billion in the year-ago period. Capital spending, net of third party contributions, was $2.1 billion, resulting in a very strong free cash flow adjusted for the third-party capital contributions of $2.2 billion or 30% of revenue. This compares to free cash flow of approximately $600 million in the year-ago period.”

“Now turning to the fiscal third quarter guidance. As Sanjay mentioned, we had a maintenance issue at one of our Taiwan DRAM fabs this week, which is impacting production. We expect this event to decrease our total revenue by approximately 2% in the third quarter, which we’ve accounted for in our guidance. Having said that, we continue to experience a strong demand environment and we, therefore, expect fiscal third quarter revenue to be in the range of $7.2 billion to $7.6 billion, and non-GAAP gross margins to be in the range of 57% to 60%. We expect to see an increase in operating expenses, again, associated with product and technology qualifications, and the funding of our fourth generation 3D NAND technology, both of which primarily impact R&D. Considering these costs, non-GAAP operating expenses are expected to be $725 million, plus or minus $25 million. We expect non-GAAP operating income to be in the range of $3.6 billion to $3.8 billion. Based on a share count of approximately 1.25 billion shares, these results should drive non-GAAP EPS of $2.83, plus or minus $0.07.”



I’ve got some MU, but I have two moderate worries - the convertible debt, and the intellectual property dispute. It was from Electric Phred that I learned about the debt, so I’m reassured to see that he’s also holding MU. The downturn on good news doesn’t bother me.

They beat guided up and analysts raised their targets except Citi who raised some valid concerns and downgraded. Worth watching closely!

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They beat guided up and analysts raised their targets except Citi who raised some valid concerns and downgraded. Worth watching closely!

Chips are cyclical which means boom and bust. Must watch closely!

Denny Schlesinger

There was that better-than-average group of comments, well worth reading, too. MU remains 20% of my portfolio and I’m comfortable with that.

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I added some yesterday. I still think there is a lot of potential with Xpoint.

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Thanks for pooling perspectives on this under discussed stock guys.
Appreciate it.

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For another opinion, here’s a review of the results and prospects from the Micron board.


For those who want deep dive analysis and prognostications, then the goto guys on Seeking Alpha are:
Electric Phred
William Tidwell
Mark Hibben
Gary Alexander
Joe Albano