Micron Technology Inc (NASDAQ:MU) shares are trading lower Thursday on the heels of the company's fourth-quarter financial results. Here's a rundown of the report and a look at what appears to be driving the action.
Q4 Revenue: $4.01 billion beat estimates of $3.91 billion
Q4 EPS: Loss of $1.07 beat estimates for loss of $1.18
"During fiscal 2023, amid a challenging environment for the memory and storage industry, Micron sustained technology leadership, launched a significant number of leading-edge products, and took decisive actions on supply and cost," said Sanjay Mehrotra, president and CEO of Micron.
"Our 2023 performance positions us well as a market recovery takes shape in 2024, driven by increasing demand and disciplined supply. We look forward to record industry TAM revenue in 2025 as AI proliferates from the data center to the edge."
Outlook: Micron said it expects fiscal first-quarter revenue to be between $4.2 billion and $4.6 billion versus estimates of $3.97 billion. The company anticipates an earnings loss of $1 to $1.14 to per share versus estimates for a loss of 90 cents per share. The weak earnings outlook appears to be weighing on the stock.
Q4 Revenue: $4.01 billion beat estimates of $3.91 billion
Q4 EPS: Loss of $1.07 beat estimates for loss of $1.18
"During fiscal 2023, amid a challenging environment for the memory and storage industry, Micron sustained technology leadership, launched a significant number of leading-edge products, and took decisive actions on supply and cost," said Sanjay Mehrotra, president and CEO of Micron.
"Our 2023 performance positions us well as a market recovery takes shape in 2024, driven by increasing demand and disciplined supply. We look forward to record industry TAM revenue in 2025 as AI proliferates from the data center to the edge."
Outlook: Micron said it expects fiscal first-quarter revenue to be between $4.2 billion and $4.6 billion versus estimates of $3.97 billion. The company anticipates an earnings loss of $1 to $1.14 to per share versus estimates for a loss of 90 cents per share. The weak earnings outlook appears to be weighing on the stock.
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NewsTranscript
00:00 Yeah.
00:00 Micron technologies, Q4 adjusted EPS coming in here at a loss of a dollar
00:04 and seven cents, but beats the loss of a dollar 18 estimate sales of 4.01
00:10 billion beat the 3.91 billion estimate.
00:13 They do see Q1 adjusted EPS at a loss of a dollar 14 to a loss of $1.
00:19 Versus the loss of estimate 90 cents.
00:22 So definitely a little bit worse on that guidance for EPS revenue
00:27 guidance here at 4.2 billion to 4.6 billion versus a 3.97 billion estimate.
00:34 So also not doing well here.
00:35 It did declare a 0.115 dividend.
00:40 Don't know how that's going to help them much, but I think what you're pointing
00:43 to here is such a important theme to catch, right?
00:48 It's not only necessarily for Micron, but it seems to me like things are coming
00:52 more in line with the fundamentals.
00:54 For a while there, we were riding story on that AI move, and now we're moving
00:59 back into the fundamentals where they matter.
01:02 And I think that this is important for especially newer investors or traders
01:06 to learn is that things kind of flow.
01:08 Sometimes technicals.
01:09 Lead sometimes story leads.
01:11 It seems like fundamentals is starting to take over.
01:14 It is.
01:15 And what happens is when the story cools off, which it has cooled off on everything,
01:20 the AI story is ice cold right now.
01:22 Not saying it's dead, but it's ice cold.
01:24 It's not making stocks pop.
01:26 Amazon has that little $1 pop on the AI stories of selling opportunities.
01:29 Doc goes straight down for three days.
01:31 So great point money, Mitch, when they start to reconnect with
01:34 fundamentals, it can get ugly.
01:36 Let's just give this perspective and maybe Micron bounces back because we
01:40 know this business is very cyclical.
01:42 This is a business that makes a lot of money in the good times and it loses
01:46 a lot of money in the bad times.
01:47 But just talking right from the call, we expect a challenging market
01:52 environment in the fourth quarter of 2022 and in the first quarter.
01:56 No, sorry.
01:56 This is in the fourth quarter of 2023 and the first quarter of 2024.
02:01 They expect.
02:02 Free.
02:02 Wait a second.
02:03 No, I'm just trying to find it here.
02:05 Sorry.
02:06 Sorry.
02:08 I'm on the wrong.
02:08 I'm on the wrong thing here.
02:09 I'm trying to find it here, but in any regard here, sorry, I'm reading from an
02:13 old report.
02:14 I had the wrong report up there, but anyways, they're going to be cashflow negative here.
02:18 So cashflow negative, which means they're burning cash.
02:22 They're still burning cash and they expect the challenging environment to
02:24 continue for the foreseeable future.
02:26 Didn't really give, you know, when they're going to start actually making money again
02:30 here, which is a concern when they're making money, they're making good money.
02:34 Like this thing was making what was bring up the earnings on the pros.
02:38 It'd be good exercise.
02:38 You can see how cyclical this is.
02:40 Money Mitch, can you show us the earnings?
02:41 Yeah.
02:41 For on this, take two seconds.
02:43 Mitch is going to bring that up.
02:44 Joel, give us quick technicals, but I just want to make my point how cyclical
02:47 the earnings are at Micron.
02:49 Uh, you had a dip, but you're quite a bit off the pre-market low.
02:52 If you were waiting for a gap fill, uh, from August, uh, you needed to get down
02:57 to 6439 and what do you know, when the pre-market they take it down to 6440.
03:04 So you're a buck 50 off that level.
03:07 So I think there's already been a little bit of a bounce here.
03:11 Uh, I'll use the bottom of yesterday's range is resistance at 6675.
03:17 That's a buck away and it just kind of feel, you know, the
03:19 fact that we're that far off.
03:21 I think that if you do get anywhere near that pre-market low, again, I
03:25 expect that to be a decent support to, uh, Mitch, do you have the, uh,
03:30 the cyclicality of earnings for this?
03:33 Can we zoom into this for us?
03:34 Blind people?
03:35 Yeah.
03:36 And just, I'll put a big here.
03:37 It's just, uh, it's taking away the dates here on the left.
03:41 That's okay.
03:42 We just know it's the last one.
03:43 I'm going to zoom in here and give you guys the last couple quarters here.
03:47 You guys see them on the EPS side right here.
03:51 And then the revenue side here.
03:52 And so you can see how they were actually getting a nice little jump here.
03:56 Uh, and this was getting up there even to 8 billion.
03:59 Now look where the revenues are.
04:01 Half of that.
04:02 Half of that, right.
04:04 And I think that that, that tells us a big part of the cyclicality of these earnings.
04:10 Right?
04:10 So you're going to see spikes, but you're also going to see declines here.
04:14 Very similar.
04:15 If you roll back a little bit further, look just a couple of years back, 8
04:19 billion, and then it went back down the four.
04:21 So it doesn't mean that it can't go back to 8 billion, right?
04:25 But it does show that it has its flow, right?
04:29 It goes from a spike of a high and then slowly trickles down and then comes back.
04:34 So that's something that we can be looking for in micron.