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Shares of memory-chip maker Micron were up nearly 3% on Tuesday, in advance of the earnings report.
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Memory chip maker
Micron Technology
posted better-than-expected results for its latest quarter on Tuesday. The firm also provided an optimistic outlook that exceeded Wall Street’s estimates, as pricing improved across the company’s product portfolio.
Micron
shares (ticker: MU) were up nearly 4% in after-hours trading. That follows a 2.7% gain during Tuesday’s regular session, in which shares closed at $82.05.
For its fiscal second quarter ended March 3, Micron reported revenue of $7.8 billion, up 25% from a year ago and above the company’s target of $7.5 billion. Adjusted profits were $2.14 a share, up from 98 cents a year ago and above the company’s forecast for $1.95.
Under generally accepted accounting principles, the company earned $2 a share, up from 53 cents a year earlier. Non-GAAP gross margin in the quarter expanded to 47.8%, from 47% in the fiscal first quarter and 32.9% a year ago.
“Micron’s excellent second quarter results exceeded the high end of our guidance for both revenue and margin, reflecting our strong execution,” Micron CEO Sanjay Mehrotra said in a statement. “We’re leading the industry in technology across DRAM and NAND, and our product portfolio momentum is accelerating.”
In the quarter, DRAM revenue was up 29% from a year ago and represented 73% of total revenue. NAND revenue was up 19%. The company said average selling prices in the quarter were down in the mid-single-digit percentage from the first quarter for DRAM, but up in the mid-single-digits for NAND.
The company said revenue related to data-center applications was up more than 60% in the quarter, while PC demand improved as enterprise-PC sales increased. Micron said it had record revenue in parts for the automotive sector, while industrial revenue was up about 60%.
For the fiscal third quarter, Micron is projecting revenue of $8.7 billion, give or take $200 million, with a gross margin of 48%, plus or minus a point, and non-GAAP profits of $2.46 a share, give or take a dime. The Wall Street consensus had called for $8.1 billion in revenue and non-GAAP profits of $2.24 a share. The company said it expects margin improvement in both NAND and DRAM chips in the quarter.
Sumit Sadana, Micron’s chief business officer and acting chief financial officer, said NAND pricing in the current quarter will benefit from the recent production issues at two factories run by a joint venture owned by
Western Digital
(WDC) and Japan-based Kioxia. But he also noted that NAND pricing in the February quarter improved sequentially, in part from a better product mix. Sadana said that sales of solid-state drives, or SSDs, were up 80% year over year, with data-center SSD sales doubling from a year ago.
Sadana said that Micron sees “flattish” PC unit growth for the full year, but with a positive mix shift toward enterprise desktop and laptop PCs that use more memory than consumer-targeted models. For mobile phones, he says, Micron projects low-single-digit unit growth, but again with strong growth driven by higher memory content per phone. He says Micron sees 5G phone units up 40% for the calendar year.
As for the automotive sector, Sadana says that the company expects the industry to remain supply-constrained for multiple quarters to come, but with average memory capacity per car soaring as more auto makers shift to electric vehicles. He notes that some EVs require $750 of memory chips per car—about 15 times the average current vehicle. The shift to EVs, he says, should be “an incredibly powerful tailwind for years to come.”
In slides prepared for the company’s earnings call this afternoon, Micron said that it doesn’t expect any negative impact on production tied to the Russia-Ukraine war, but added that it does expect an increase in costs “as we secure supply of certain raw materials that could be at risk.” Sadana added that the company has minimal exposure to Russian and Ukraine—under 1% of total revenue—and has stopped serving customers in the area.
Micron added that it is “on track to deliver record revenue with solid profitability” for the fiscal year, with “strong bit shipment growth” in the fiscal second half. It projects calendar 2022 bit growth in the mid-to-high teens for DRAM, with about 30% bit growth demand for NAND memory.
Micron also noted it repurchased 4.8 million shares in the quarter for about $408 million.
Write to Eric J. Savitz at eric.savitz@barrons.com
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