Micron (MU) Q1 Earnings Match Estimates, Revenues Surpass

Micron Technology, Inc. (NASDAQ:MU) reported first-quarter fiscal 2020 non-GAAP earnings per share of 48 cents, in line with the Zacks Consensus Estimate but lower than the year-ago quarter’s $2.97.

Meanwhile, Micron’s revenues of $5.144 billion in the quarter under review exceeded the Zacks Consensus Estimate of $5.028 billion but dropped around 35% on a year-over-year basis.

Although the company suffered a drastic year-over-year fall in revenues and earnings, management’s positive commentary on the company’s performance beyond the current quarter is making investors hopeful.

Management expects the seasonally weak fiscal second quarter to hit rock bottom in its financial downturn. The company’s performance is expected to start improving in fiscal third quarter with continued recovery in the second half of 2020.

Increasing mix of high-value solutions, enhancement in customer engagement and improvement in cost structure are positives. Growing demand from cloud-computing providers and acceleration in 5G adoption make authorities hopeful. Deceleration in DRAM price declines and improvements in NAND pricing are a tailwind.

Talking about its business with Huawei, Micron informed that it has obtained licenses for supporting various Huawei products that are not subject to Export Administration Regulations and Entity List restrictions. Moreover, it has also been qualified for new products to back Huawei's mobile and server businesses.

However, the company alerted that “it will take some time before the qualifications are completed and contribute to revenues.”

Revenue Details

DRAM revenues of $3.5 billion, accounting for 67% of total revenues in the quarter under discussion, plunged 41% year over year. However, it inched up 2% sequentially. With less customer inventories, bit shipments rose nearly 10% sequentially and in the mid-20 percent range year over year. On a sequential basis, ASP declined in the upper-single-digit percent range. DRAM revenues included $435 million of revenues from MCPs and SSDs.

NAND revenues of $1.4 billion, representing 28% of the total top line, were down 14% on a year-over-year basis but up 18% quarter over quarter. While NAND ASP increased in the low single-digit’s percentage band, shipment quantities improved in mid-teens percent range sequentially. Shipments grew in the mid-30% range year over year.

Business unit wise, revenues of the computing and networking business (CNBU) unit deteriorated 45% from the year-ago quarter and 4% sequentially to $2 billion. Higher volumes and moderating decline in ASP drove sequential growth.

Revenues from the Mobile Business Unit (MBU) of $1.5 billion softened 34% on a year-over-year basis. The metric increased 4% sequentially though. Strong growth in MCP revenues, backed by nearly 50% sequential growth in DRAM and NAND bits, was a tailwind.

The Embedded Business Unit revenues logged $734 million, down 21% from the year-ago quarter but up 4% from the previous quarter. Content growth in the automotive market drove sequential revenues.

Revenues from the Storage Business Unit (SBU) comprising SSD NAND components and 3D XPoint totaled $968 million, down 15% year over year but up 14% sequentially. SSD volume expansion and ASP increases drove sequential growth.

Micron Technology, Inc. Price, Consensus and EPS Surprise

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Written By: Zacks Investment Research