Micron Technology, Inc. (MU)

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Micron Technology, Inc. (MU)

Credit Suisse 22nd Annual Technology, Media & Telecom Conference

November 28, 2018 2:45 PM ET


Sanjay Mehrotra - President and CEO


John Pitzer - Credit Suisse


John Pitzer

I’d like to welcome everyone to the lunch keynote presentation with Micron. My name is John Pitzer, I’m the semi and semi cap equipment analyst here at Credit Suisse. It’s my distinct pleasure this afternoon to introduce Sanjay Mehrotra, the President and CEO of Micron.

We have got about a 40 minute sort of keynote of -- fireside chat here. I will kick things off, we do have some mics in the room, so if there anybody with some burning questions, please raise your hand we will try to get to the mic.

Question-and-Answer Session

Q - John Pitzer

But you know Sanjay, I think there’s a saying that kind of goes once you join the CIA or the Mafia you can never leave. You are kind of making that true for memory CEOs, after a very distinguished career at SanDisk, you have now been at Micron for about 18 months I believe, you didn’t have to come back. It might be interesting for the audience to hear, what did you see either at an industry level or specifically at a company specific level that made you want to come back?

Sanjay Mehrotra

So, first of all, let me just say, it’s great to be here. Thank you, John for inviting us. And of course during the presentation -- course of the discussion over the next 45 minutes or so I will be making certain forward-looking statements, so please do refer to our SEC filings, which we may from time to time related to the various risk factors of the business.

So, John joining Micron 18 months ago, absolutely very, very excited at the time and continue to remain very excited. First of all, when you look at having both DRAM and NAND, as well as a 3D XPoint kind of technologies under the same roof at Micron it absolutely is a company that has I believe the best technology portfolio in the world, because there are six companies that have NAND, there are three companies that have DRAM, there are only two companies that have 3D XPoint, Micron is the one that actually has all three and is the only one that has all three of these technologies.

That really excited me. But coupled with all the market trends today in diversified markets for DRAM as well as NAND, secular demand trends and, you know, a trend of artificial intelligence absolutely requiring more and more memory and storage across applications whether it is your cloud data center or it is your smartphone or autonomous vehicles of the future. So very exciting to look at the demand trend for the future having a strong technology portfolio and absolutely having tremendous potential that the company can yet capture by speeding up its execution, by accelerating its technology cost effectiveness, driving mix of high value solutions. This is what really excited me about joining Micron 18 months ago and it absolutely keeps me totally excited when I look at where Micron is, how well it is positioned and we like to say that the industry is structurally different and Micron is structurally different, it’s a new Micron today.

John Pitzer

We whole wholeheartedly agree with you on the structural view but as you know there is always going to be a cyclical element to this industry and period of digestion. On your last conference call you talked about some of those issues around inventory digestion at some customers within the hyperscale space. This industry is hard enough to try to analyze when it’s just looking at business fundamentals. You are being forced to now incorporate political views as well around China tariffs and escalating trade tensions.

I’d be kind of curious if you could give us kind of your view of the near-term demand environment and specifically as we transition from the end of this year and the beginning of next year when we see the extra $200 billion in tariffs or the move from 10 to 25. How you think that might impact the near-term demand environment.

Sanjay Mehrotra

I think you have a lot of things in that question here. Let me first say that yes we did say in our last earnings call that inventory adjustment across certain customers, as well as CPU shortages impacted our fiscal Q1 outlook and the inventory adjustment particularly in enterprise, in cloud, as well as in graphics -- that inventory adjustment during the course of the quarter was certainly challenging.

And we saw that overall demand also and the market - overall market environment weakened through the course of the quarter. So, consequently, we had guided in the last earnings call for our revenue range for FQ1 to be $7.9 billion to $8.3 billion and our quarter is not finished yet. It actually finishes tomorrow. But I will share with you how we see it tracking. We expect our revenue for FQ1 to be near the low end of the range that we guided to previously.

And, overall, Micron continues to execute actually very well and we had guided in terms of EPS to $2.95 plus or minus $0.07 in our last September earnings call, through strong execution; we actually see our EPS for FQ1 to be somewhat above the mid-range that we had guided to, mid-range -- midpoint of the range that we are guided to, midpoint being $2.95, we see it somewhat above the $2.95. And I think what’s important to understand is that, that is very robust level of profitability for the company and the company absolutely continues to execute well. Now, you also ask…

Read the rest of this transcript on seekingalpha.com