In August the company’s CFO warned that, although Micron’s fourth fiscal quarter (its current quarter, running from June – August) would come close to the guided figures, there was reason to anticipate worse times in the first fiscal quarter, which runs from December to February.
The fourth fiscal quarter did come within expectations, and the September 29 earnings call gave an upbeat message. This is somewhat surprising given that the US Department of Commerce recently prohibited Micron from shipping to Huawei as of September 14, and Huawei accounted for 10% of Micron’s fourth fiscal quarter revenues.
Micron executives attested to their ability to move the same production to other customers. This may have been like a game of musical chairs, with Samsung and SK hynix forsaking other opportunities to take Micron’s share of its abandoned Huawei business, while Micron moved in to satisfy the needs of the forsaken Samsung and SK hynix customers. The DRAM market is relatively balanced, after all. It’s also likely that everyone who had to find a new supplier needed to increase the prices they were paying to assure a continued source of supply.
Micron’s guidance for its first fiscal quarter, the one the CFO spoke of, wasn’t all that bad. CFO David Zinsner reminded listeners on the company’s earnings call that the fourth quarter had 14 weeks while the first quarter will only be 13 weeks long. While guidance for the first quarter looks pretty bad without taking this into account (i.e. a 14% Q/Q revenue decrease), the numbers are significantly more palatable when accounting for the difference in duration, where the weekly revenue decrease between these two quarters is only projected to be 7.5%.
Still, down is down, and Micron’s stock price should be expected to decline as a result.
Micron’s earnings serve as a leading indicator for the rest of the industry. Micron reports its earnings one month prior to most other major memory makers, and two months ahead of Kioxia. This indicates that we can anticipate similar reports from these companies as they report in coming months.
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