SAN DIEGO -- Micron Technology Inc. roared past analysts’ consensus estimate in
its recent quarter with revenue and profit rising sharply on surging demand, a
boost from its Numonyx acquisition and stronger than expected increase in
average selling prices for memory products.
The company’s fiscal third quarter net income strengthened to $939 million,
or 92 cents per share, compared with $365 million, or 39 cents per share, in the
preceding quarter and a net loss of $301 million, or 37 cents per share, in the
Sales in the quarter ended June 3, 2010 rose to $2.3 billion from $2 billion
in the fiscal second quarter and more than double the $1.1 billion reported in
the year-ago comparable quarter. Analysts were on the average expecting the
company to post sales of $2.1 billion for the recently concluded quarter.
Here's what analysts said about the results:
Dinesh Moorjani, an analyst with Gleacher & Co.
''Micron reported a solid May quarter driven by a 9 percent quarter/quarter
DRAM ASP increase and a modest 4 precent quarter/quarter decline in NAND ASP. We
are lowering our August quarter EPS from $0.49 to $0.36 due primarily to
purchase accounting for Numonyx, which impacts EPS by $0.11.
''Micron continues to face DRAM cost headwinds in the 4Q due to the 50-nm
conversion at the Inotera JV, with DRAM cost per bit expected to decline only in
the low single-digits after an increase in the May quarter. However, we believe
yield issues have been resolved and that we should see solid DRAM cost
reductions, in the low- to mid-teens range per quarter beyond the current
Based on customer indications, DRAM bit demand growth is expected to be in
the mid-teens for C3Q10, and NAND bit demand is expected to increase by close to
20 percent Q/Q for the industry. DRAM contract prices have remained flat
quarter-to-date (i.e. through June) in a seasonally slow demand period, while
inventory levels are tight across the channels and at OEM customers heading into
back-to-school. This is consistent with our checks which indicate that DRAM
manufacturers are still unable to fully meet customer demand requirements.''
Hans Mosesmann, an analyst with Raymond James & Associates
''Micron reported May quarter sales of $2.29 billion (up 16.8 percent
quarter/quarter) verses our and consensus $2.12 billion (up 8.1 percent
quarter/quarter) estimate. EPS for the May quarter was $0.92 vs. our $0.44
Inventories at Micron grew by $672 million sequentially, which may have been
the cause for the weakness in the shares after hours. Inventory was likely down
single digits quarter/quarter excluding the inventory from Numonyx. The Numonyx
dynamic causes the cosmetics of Micron’s gross margin expansion to stall.
Micron does not provide outlook; however, the company expects ''bit'' DRAM
production to flattish, as the Inotera transition to Micron’s “stack” technology
recipe is running approximately two months behind. Micron expects to catch up in
the quarter and expects a mid-teens ramp into the November quarter. Bit NAND
Flash production growth is also expected to be flattish for the August quarter
as the company transitions to 25-nm process technology.''
Dunham Winoto, an analyst with Avian Securities LLC
''Compared to our prior estimate, revenues are up modestly but EPS rises a
bit more to reflect the continuing benign supply/demand and pricing environment
during the quarter. Despite some concerns over weaker PC sell-through due to
Europe, our checks indicate that memory demand particularly DRAM has remained
solid, with tightness being cited by contacts. Keep in mind that we are in Q2, a
quarter when we normally see seasonally weak memory demand, so we consider this
data point to be quite positive.
In addition, though there are reports of a reduction in DRAM loading per box
due to elevated memory prices, our checks have not found much meaningful data to
support such cuts. Finally, we expect Q3 PC ODM builds of 15-20 precent
(probably closer to the low-end of the range), slightly below levels we have
seen in the last few years, but considering the strength in the 1H are still
substantially up on a year-year basis.''