Source: Wall Street News
Author: Cho Chak-hee

After the US stock market on Wednesday, June 28,$Micron Technology (MU.US)$The results for the third fiscal quarter of fiscal year 2023 ended June 1 this year were announced.

Financial reports show that Micron Technology's adjusted loss of US$1.43 per share in the third fiscal quarter was better than analysts' expectations of US$1.59; the adjusted net loss was US$1,565 million, which is narrower than the loss margin of US$2,081 billion in the second fiscal quarter.

The company's revenue during the reporting period was US$3.75 billion, higher than market expectations of US$3.69 billion; operating loss under non-GAAP was US$1.47 billion, with an operating loss ratio of 39.2%, better than market expectations of US$1.69 billion; adjusted profit margin fell 16.1%, which was narrower than analysts' expectations of 21.1%.

In terms of revenue split, dynamic random access memory (DRAM) contributed 71% of revenue in the third fiscal quarter, while flash memory devices (NAND) contributed 27% of revenue.

Micron Technology expects adjusted revenue of 3.7 billion to 4.1 billion US dollars for the fourth fiscal quarter, with a median value higher than market expectations of 3.87 billion US dollars; profit margin for the fourth fiscal quarter is expected to fall 8% to 13%, a decline greater than the 2.79% decline expected by the market.

After the financial report was released, Micron Technology once rose more than 5% after the market, breaking through the $70 mark.

Sanjay Mehrotra, President and CEO of Micron Technology, said:

Micron Technology's revenue, gross margin, and earnings per share for the third fiscal quarter were all above the midpoint of the guidance range.

We believe that the revenue slump in the memory industry is over, and we expect profit margins to improve as the balance between supply and demand in the industry gradually recovers.

Over the long term, Micron Technology's technology leadership, product portfolio, and operational excellence will continue to strengthen our competitive position in various growth markets, including artificial intelligence and memory-centric computing markets.

Like many of its peers, Micron Technology's product orders have been drastically reduced due to increased inventory due to sluggish demand for smartphones and PCs. The company's forecasts suggest that customers have processed these inventories and are now starting to buy again.

Since this year, Micron Technology's stock price has risen by more than 30% cumulatively, outperforming the US stock market.

Although Micron's customers are getting rid of large amounts of excess inventory, the company doesn't expect a rapid return to growth in 2023. Micron believes that PC shipments are expected to drop by a “double digit” percentage from a year ago to lower than the market level before the COVID-19 pandemic. Micron predicts that the smartphone industry will shrink by a single-digit percentage from a year ago.

Micron Chief Financial Officer Mark Murphy said the company lost about $400 million in inventory for the third fiscal quarter. When Micron Technology announced its worst loss in history in the last fiscal quarter, the company's inventory expenses at the time had been reduced to 1.4 billion US dollars. The market believes that the reduction in Micron's inventory costs is an important sign that the industry is about to bottom out.

Before the COVID-19 pandemic, Micron had argued that expanding memory chips to more markets would avoid another boom and bust cycle. Even now, Micron's management still believes that once the current series of unusual situations (such as the COVID-19 pandemic and supply chain disruptions) is over, the industry will resume long-term profitable growth.

Micron management also saw new opportunities presented by AI. Mehrotra told analysts on the conference call:

As we said before, AI servers require six to eight times as much DRAM as regular servers, and three times as much NAND as normal servers. In fact, some customers are already deploying AI servers with higher memory capacity.

Editor/Somer