Memory giant Micron released its financial report and forecast following the market on Thursday (29th), which failed to meet market expectations, highlighting that the chip market is even more sluggish. Micron plans to slash capital spending by at least 30 percent this fiscal year and slash spending on wafer equipment by 50 percent, amid lingering concerns that the poor economic outlook might drag on demand for end-device equipment.
FY 2023 Q1 Estimates (Non-GAAP) vs Refinitiv Expectations
- Revenue: $4.25 billion (±$250 million) vs $5.62 billion
- Gross profit margin: 26% (±2%)
- Diluted EPS: $0.04 (± $0.1)
Micron CEO Sanjay Mehrotra pointed out that in response to the decline in demand, the company is taking corresponding actions, including slowing production and reducing capital expenditures, and capital expenditures in fiscal 2023 will be reduced by regarding $8 billion, or at least 30%, fab equipment 50% reduction in spending.
After the earnings report, Mehrotra said on a conference call that customers in various industries are cutting orders and reducing unused chip inventories, leaving the industry as a whole facing a difficult pricing environment.
Chief Financial Officer Mark Murphy also said that inventory levels are high and will be higher in the future, possibly even more than 150 days, and the company is doing everything it can to affect future supply or capacity to reduce inventory levels.
However, Micron’s forecast is expected to improve from the second half of the new fiscal year (following May next year).
Micron (Micron) (MU-US) has fallen regarding 45% so far this year. After the announcement of the financial report, the US CD-ROM once fell by more than 4%. After the company’s executives outlined the countermeasures, the decline subsided, and it temporarily fell 0.4% before the deadline.
FY 2022 Q4 (as of 9/1) key financial data (Non-GAAP) vs FactSet expectations
- Revenue: $6.64 billion (-19.7% y/y) vs $6.73 billion
- Gross profit margin: 40.3% (47.9% in the same period last year)
- Net profit: $1.62 billion
- Diluted earnings per share (EPS): $1.45 (down 40% year over year) vs $1.37
Full Year Financial Statement (Non-GAAP)
- Revenue: $30.76 billion (up 11% year over year)
- Gross profit margin: 45.9% (39.7% in the same period last year)
- Net profit: $9.48 billion
- Diluted EPS: $8.35 (38% YoY)
Micron’s Q4 revenue fell by nearly 20% to $6.64 billion, the first decline in more than two years. Diluted EPS also fell by 40% compared with the same period last year, to $1.45 per share, both lower than market expectations.
Still, full-year revenue was up 11% from last year to nearly $30.8 billion, a new record, and the sixth straight year of positive free cash flow allowed the company to return $2.9 billion to shareholders.
Micron’s memory chips are widely used to provide data storage for smartphones, PCs and servers, making the memory outlook a key indicator of demand in the electronics industry. Micron’s current revenue is still highly dependent on computing, even though its applications span multiple fields such as computing, home appliances, and automotive.
