Micron Technology Inc.
) reported adjusted first quarter fiscal 2013 loss per share of
27 cents, wider than the Zacks Consensus Estimate of 19 cents
loss per share. The straight six quarters of loss was mostly due
to lower average selling price (ASP), sales volumes,
manufacturing issues, lackluster PC demand and macro uncertainty.
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Micron reported revenues of $1.83 billion, down 12.2% year over
year. The quarter's revenue came well below the Zacks Consensus
Estimate of $2.0 billion. The decline was mainly due to lower
DRAM and NAND shipment. DRAM prices continued to fall while NAND
ASP improved a bit. Contribution from NOR Flash product was
Slowing PC sales resulted in lower demand for DRAM chips while
lingering macro uncertainty put pressure on sales of smartphones
and tablets, which in turn pressurizing NAND chip demand.
Management also stated that certain manufacturing related issues
also took a toll on first quarter results but asserted that the
issues have been taken care of.
The company's gross margin for the first quarter was 11.8%, down
from 14.6% in the year-ago quarter. The decline was primarily due
to DRAM pricing.
Selling, general and administrative (SG&A) expenses decreased
21.2% year over year to $119.0 million. The decline was mainly
attributable to lower legal and personnel costs. Research and
development (R&D) expenses declined 2.6% year over year to
$217.0 million. Operating margin was (8.6%) versus (3.9%) in the
Micron suffered a net loss of $275.0 million or 27 cents per
share compared with a loss of $187.0 million or 19 cents in the
Balance Sheet & Cash Flow
Micron ended the first quarter with cash and short-term
investments of $2.22 billion, down from $2.56 billion in the
previous quarter. Receivables were $1.14 billion, down from $1.29
billion in the previous quarter. Inventories increased 1.0% from
the prior quarter to $1.83 billion.
The company had $3.44 billion in long-term debt, up from $3.26
billion in the prior quarter. Cash generated from operations was
$236.0 million, compared with $450.0 million in the prior
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 will
prefer to remain cautious on the memory market for the near term,
while for the long term it believes that industry demand/supply
metric will be balanced as no new wafer capacity additions will
Apart from this, management expects SG&A expense in the
second quarter of 2013 to be between $135.0 million and $145.0
million. Research and development expense is expected to be
between $220.0 million and $230.0 million.
Micron's first quarter results were disappointing as the net loss
per share was wider than the Zacks Consensus Estimate. The
quarter's revenue also lagged our estimate. Lackluster demand for
desktop PCs will remain an overhang over the DRAM fundamentals.
Micron recently received an approval from the Japan Fair Trade
Commission regarding its Elpida buyout. But the company still
awaits approval from Elpida's creditors, the Tokyo District
Court, as well as regulatory bodies in other countries to close
the deal. The company expects to close the deal by first half of
We remain encouraged by Micron's Elpida buyout (a bankrupt
Japanese chipmaker) that could bring in a larger DRAM market
) reliance on Elpida would be a win-win situation for Micron,
On the other hand, we believe that it won't be easy for Micron to
capture share from
), a key player in the NAND zone. However, with support from
Apple, its prime NAND customer, situation could be in Micron's
favor going forward.
Currently, Micron has a Zacks #3 Rank (Hold).