What should investors look for when Micron Technology (MU) reports earnings tomorrow?

NASDAQ: MU | Micron Technology, Inc. News, Ratings, and Charts

MU – Micron Technology’s earnings and guidance for second half demand will really impact how the shares move.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

Micron’s (MU) shares have given back nearly all of their 2019 gains over the last two months, as bad news about trade tensions and declining memory prices kept arriving.

For that reason, soft results and guidance might not by themselves be enough to drive Micron’s shares lower post-earnings. Rather, what might matter is just how bad Micron’s near-term results and guidance are, and how quickly the company expects conditions to improve.

On average, analysts polled by FactSet expect Micron to report May quarter (fiscal third quarter) revenue of $4.69 billion (down 40% annually) and non-GAAP EPS of $0.79 (down 75%). For the August quarter — Micron has been providing quarterly guidance on its earnings call — the consensus is for revenue of $4.56 billion (down 46%) and EPS of $0.58 (down 84%).

In addition to Micron’s sales and EPS numbers, here are some things for investors to keep an eye on as the memory giant reports after the bell on Tuesday and host an earnings call at 4:30 P.M. Eastern Time.

1. DRAM and NAND Pricing Trends

Three months ago, Micron reported its DRAM average selling price (ASP) fell by a low-20s percentage sequentially during its February quarter, and that its NAND flash memory ASP fell by a mid-20s percentage. And from all indications, ASPs have remained under pressure since.

The consensus is for Micron’s DRAM ASP to have dropped by another 23% sequentially during its May quarter, and for its NAND ASP to have dropped 18%.

2. Full-Year DRAM and NAND Supply/Demand Guidance

In March, Micron forecast full-year DRAM and NAND industry supply growth would only be moderately higher than demand growth. For DRAM, the company forecast industry bit supply would rise by a mid-to-high teens percentage in 2019, and that demand would rise by a low-to-mid teens percentage. For NAND, it forecast bit supply would rise by a high-30s percentage, and that demand would rise by a mid-30s percentage.

However, those outlooks assumed a meaningful second-half demand pickup. With recent guidance from Broadcom  (AVGO) and others putting such a recovery into question, Micron might revise its demand forecasts. At the same time, ongoing memory capital spending cuts could lead its supply guidance to also be lowered.

3. Huawei Commentary

Quite a few chip suppliers have slashed their guidance on account of the recent Huawei parts ban, and it doesn’t look as if Micron will be unscathed either.

Mizuho analyst Vijay Rakesh estimates the Huawei ban, which took effect last month, hurt Micron’s May quarter sales by about $100 million. During Micron’s May 23 business update call, CFO Dave Zinser noted that Huawei accounted for 13% of its sales during the prior two quarters.

4. Cloud Demand

Inventory cuts and a hardware spending pause among Internet/cloud giants (the proverbial hyperscalers) have been a major headwind for the memory market — both in terms of the direct impact of these actions on unit sales, and their indirect impact on DRAM and NAND prices. For that reason, any commentary about expected second-half memory demand from the hyperscalers will get attention.

While cutting his Micron estimates over the weekend, Rakesh noted that “supply chain disruptions and data center optimization [efforts]” is resulting in additional push-outs for data center hardware spending. However, he added that “expectations are for a robust 2020 recovery,” given that data center construction activity remains strong.

5. Capital Spending Plans

Micron has already cut its fiscal 2019 (ends in Aug. 2019) capex budget twice the year. In March, the company guided for fiscal 2019 capex of roughly $9 billion, down from a prior outlook of $9 billion to $9.5 billion. In light of the memory industry’s current pressures as well as what has been reported about industry capex, a fresh capex budget cut would hardly be shocking.

Also keep an eye on commentary Micron shares about its fiscal 2020 capex plans. For now, the consensus is for capex to drop to $8.5 billion in fiscal 2020.

6. Inventories

In spite of a 21% annual revenue drop, Micron’s inventories rose 38% annually during its February quarter to $4.39 billion, with days of inventories rising by 27 sequentially to 134. In March, the company indicated that inventories could rise some more during the May quarter, albeit while forecasting that they’ll drop later in 2019 thanks to Micron’s capex cuts.

7. Stock Buybacks

Micron spent $2.5 billion on stock buybacks during the first two quarters of fiscal 2019, and reiterated in March that it plans to spend at least 50% of its annual free cash flow on buybacks, via the $10 billion buyback program that commenced in September 2018. The company had $9.2 billion in cash at the end of February, and net cash (cash minus debt) of about $3 billion.


Micron Technology, Inc. (MU - Get Rating) shares . Year-to-date, Micron Technology, Inc. (MU - Get Rating) has gained 4.66%, versus a 18.01% rise in the benchmark S&P 500 index during the same period.


This article is brought to you courtesy of TheStreet .

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MUGet RatingGet RatingGet Rating
AVGOGet RatingGet RatingGet Rating

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

Top Stories on StockNews.com

: SFIX | Stitch Fix, Inc. -  News, Ratings, and Charts

This Online Apparel Stock Is a Marvelous Bargain

Separating this online apparel stock from other online ‘box’ services is the fact it has been posting a profit each quarter since it went public two years ago. Continue reading to find out what it is, and what it could mean for the investor.
: APHA | Aphria Inc. Common Shares News, Ratings, and Charts

How Is Aphria (APHA) Outperforming Other Cannabis Companies?

Yesterday Aphria (APHA) reported impressive first-quarter earnings before the opening bell.
: .INX | S&P 500 Index News, Ratings, and Charts

What the Most Important Fed News In Years Likely Means For Stocks

The market is laser-focused on interest rate cuts, with various Fed statements indicating how hawkish or dovish the FOMC plans to be often causing wild S&P 500 swings. Read to see what the most important Fed news likely means for stocks.
NYSE: PBI | Pitney Bowes Inc.  News, Ratings, and Charts

Find Out: Why I Just Bought Calls In This $4 Stock

Today's featured article covers why I just bought calls in a $4 stock. Continue reading to find out what the stock is and how investors can reap the benefit from it.
: ACB | Aurora Cannabis Inc. Common Shares News, Ratings, and Charts

Can Aurora Cannabis (ACB) Dominate the Cannabis 2.0 Market?

As we are just a few days away from the cannabis 2.0 launch in Canada, cannabis investors are looking for any glimmer of hope to get them out of one of the worst bear markets the sector has ever seen.

Read More Stories


More Micron Technology, Inc. (MU) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All MU News
Page generated in 1.4423 seconds.