Micron Technology Inc.
(
MU
) reported adjusted fourth quarter fiscal 2012 loss per share of 24
cents, wider than the Zacks Consensus Estimate of 22 cents loss per
share. The miss was mostly due to lower average selling price (ASP)
and macro uncertainty.
Revenue
Micron reported revenues of $1.96 billion, down 8.3% year over
year. The quarter's revenue came well below the Zacks Consensus
Estimate of $2.10 billion. The decline was mainly due to lower DRAM
and NAND shipment and flat ASP. Contribution from NOR Flash product
was modest.
Operating Results
The company's gross margin for the fourth quarter was 11.2%,
down from 15.0% in the year-ago quarter. The decline was primarily
due to DRAM pricing.
Selling, general and administrative (SG&A) expenses
decreased 10.3% year over year to $139.0 million. The decline was
mainly attributable to lower legal and personnel costs. Research
and development (R&D) expenses grew 12.4% year over year to
$235.0 million. Operating margin was (7.1%) versus (2.4%) in the
year-ago quarter.
Micron suffered a net loss of $243.0 million or 24 cents per
share, compared with loss of $135.0 million or 14 cents in the
year-ago quarter.
Balance Sheet & Cash Flow
Micron ended the fourth quarter with cash and short-term
investments of $2.56 billion, up from $2.33 billion in the previous
quarter. Receivables were $1.29 billion, down from $1.33 billion in
the previous quarter. Inventories decreased 4.3% from the prior
quarter to $1.81 billion.
The company had $3.26 billion in long-term debt, slightly up
from $3.20 billion in the prior quarter. Cash generated from
operations was $450.0 million, compared with $686.0 million in the
prior quarter.
Guidance
Micron did not provide any specific guidance for revenue or
earnings. But the company asserted that it will remain focused on
cost cutting initiatives, new product introductions and
manufacturing efficiencies. The company also said that it expects
more NAND consumption following the growing demand for smartphones
and tablets.
Apart from this, management expects SG&A expense in the
first quarter 2013 to be between $135.0 million and $145.0 million.
R&D expense is expected to be between $220.0 million and $230.0
million.
Our Take
Micron's fourth quarter results were disappointing as the net
loss per share was wider than the Zacks Consensus Estimate. The
quarter's revenue lagged our estimate. Lackluster demand for
desktop PCs will remain an overhang over the DRAM fundamentals.
However, we remain encouraged by Micron's Elpida buyout (a
bankrupt Japanese chipmaker) that could bring in a larger DRAM
market share. Also,
Apple Inc.
's (
AAPL
) reliance on Elpida would be a win-win situation for Micron, going
forward.
On the other hand, we believe that it won't be easy for Micron
to capture share from
SanDisk Corp.
(
SNDK
), a key player in the NAND zone. However, the renewal of
operations in Thailand may help the company going forward.
Micron Technology has a Zacks #3 Rank, implying a short-term
Hold rating.
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