Micron stock slides on weak earnings

Micron’s quarter came in just above its own forecast of $3.9 billion in revenue, an adjusted loss of $1.15 per share and a GAAP loss of $1.33 per share.

For the November quarter, Micron expects revenue to be $4.4 billion, plus or minus $200 million, which is above the old Wall Street consensus of $4.2 billion. The company expects a non-GAAP loss for the quarter of $1.07 per share, which is a few pennies more than the consensus forecast for a loss of $1.04 per share.

Micron sees demand for DRAM bits for calendar 2023 growing in the mid-single digits. For NAND, the company now expects growth in the teens, up from previous forecasts in the high single digits, reflecting strength in some consumer end markets.

In late trading, Micron stock was down 3.8%.

“Our 2023 performance positions us well as a market recovery takes shape in 2024, driven by increased demand and disciplined supply,” Micron CEO Sanjay Mehrotra said in the company’s earnings press release. “We are looking forward to registering the TAM industry [total addressable market] Revenues in 2025 as AI spreads from the data center to the edge.

For the full year, revenue was $15.5 billion, down 49% from fiscal 2022. On a non-GAAP basis, the company lost $4.45 per share in fiscal 2023, compared to a profit of $7.75 the year before.

The big loss is not a surprise. Micron has been hurt by weak demand for both DRAM and NAND memory chips in its core end markets – computers, mobile phones and data centers. The company previously expected calendar 2023 demand growth in the low to mid-single digits, in percentage terms, for DRAM, and high single digits for NAND, below the company’s long-term growth forecast for mid-single digits for DRAM and low 20s for NAND. .

“Most customer memory and storage inventories in the PC and smartphone markets are now at normal levels, consistent with our previous expectations,” the company said in prepared remarks for its quarterly earnings call. “Inventory levels are normal for most customers in the automotive market as well. Inventory for data center customers is also improving and will likely return to normal in early calendar 2024. Consequently, we see demand continuing to strengthen, resulting in a turn in pricing. Some customers have made strategic purchases in DRAM and NAND to take advantage of unsustainably low prices as the market begins to recover.This latest observation points to the possibility of lower-than-expected module volumes in the near term.

In PCs, Micron continues to expect calendar unit volumes for 2023 to decline by low double-digit numbers year-over-year, with low to mid-single-digit growth in 2024. Micron added that AI-enabled PCs will drive increased demand for Memory through the next refresh cycle over the next two years.

In the mobile space, Micron expects 2023 smartphone unit volume to decline in the mid-single digits, with growth in the mid-single digits in calendar 2024.

Micron added that compared to traditional servers, AI servers use a “significantly” larger number of DRAM and NAND chips, “with greater technological complexity, strong product value, and higher profitability.” The company said it believes data center revenues have bottomed out.

The company also said that “demand for traditional servers remains weak,” while demand for AI servers was strong. Data center customers are shifting budgets to AI servers from traditional servers, Micron said. “Total server unit shipments are expected to decline in calendar 2023, the first year-over-year decline since 2016,” the company said. “We expect overall server unit growth to resume in calendar 2024 to help meet increased workload demand.”

In response to weak demand, Micron has cut spending. Full-year capital expenditures were $7 billion, in line with previous guidance, down more than 40% from the prior year, with spending on chip manufacturing equipment down more than 50%. Micron said last quarter that it continues to see spending on chip manufacturing equipment for fiscal 2024 lower year over year from fiscal 2023 levels.

Write to Eric J. Savitz at [email protected]