Micron Reports Another Strong Quarter To End The Year On A High Note

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Hitting record revenue, non-GAAP earnings per share (EPS), and operating cash flow, Micron (NYSE:MU) reported another solid quarter. At $6.1 billion, the company’s Q4 2017 revenue nearly doubled on a year-on-year (y-o-y) basis and grew 10% sequentially, driven by stronger DRAM ASPs and higher NAND bit volumes. The company continues to witness a positive industry environment which, combined with additional bit growth from current technologies and progress on deploying the next-generation technologies in manufacturing, helped Micron beat analyst guidance yet again in Q4 2017.

The production technology execution. as well as the bit growth and cost reductions, has enabled Micron to significantly strengthen its cash flows and financial performance in the last few quarters. Micron expects the favorable demand-supply environment to persist into 2018, supported by continued strong growth in both DRAM and NAND demand, reflecting broader trends in the data center and mobile markets as well as increased adoption of SSDs across enterprise, cloud and client PCs.

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Focus On Higher Value-Add Solution To Improve Micron’s Product Mix

In addition to the positive pricing environment and higher bit volumes in DRAM and NAND, the improving product mix (towards higher value-add solutions) is an important factor driving the company’s growth momentum.

In Q4 2017, Micron’s SSD revenue grew by 71%. With strong demand for its client SSDs, Micron has been shipping solutions to most leading PC OEMs. With improving technology and product competitiveness, Micron’s global SSD revenue market share has doubled in the fiscal year.

Lower Bit Growth Than Industry Due To Technology Transition Timing

Micron’s DRAM revenue increased 13% sequentially in Q4 2017 and more than doubled from the previous year’s comparable quarter. This was due to a 5% increase in bit shipments and an 8% increase in ASPs. For fiscal 2018, Micron expects its bit growth to be at or slightly below industry growth rates due to the timing of the DRAM technology transition. For calendar 2017, the company forecasts DRAM industry bit supply growth of around 20%, slightly below expected demand growth.

Micron’s Trade NAND revenue increased 8% sequentially and 81% y-o-y, driven by a 3% increase in bit shipments and a 5% increase in ASPs. Based on the timing of the technology transition, Micron expects its bit growth in NAND to be relatively muted in the first half of fiscal 2018, but expects stronger growth in the second half of the year.

Going Forward

For the Q1 fiscal 2018, the company expects revenues between $6.1-6.5 billion, a gross margin in the range of 50-54% and EPS ranging between $2.09-$2.23.

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