On June 30, Beijing time, Micron Technology, a global provider of memory chips and storage solutions, announced its financial report for the third quarter of fiscal year 2020 as of May 28, 2020. According to financial report data, Micron Technology 's revenue growth in this quarter exceeded analysts' expectations, but unfortunately, net profit declined compared with the same period last year.
Since the beginning of 2020, Micron Technology 's stock price has increased and fallen significantly. During the rapid spread of the epidemic in the United States at the end of March, the stock price fell by nearly 20%. After the release of the Q3 financial report, the stock price of Micron Technology experienced a slight rise.
Micron Technology was listed on Nasdaq in 2009. It started with the memory business and has now become one of the giants in the semiconductor industry. Its DRAM and NAND memory chips are leading the world. After the Q3 financial report was released, investors showed their affirmation of the financial report of Micron Technology with practical actions. However, it should be noted that Micron Technology still has many thorns on the road ahead. The global semiconductor market continues to be sluggish, and other chip giants are not lenient in seizing the market. In this state, can Micron Technology break through the obstacles?
revenue increased by 13.6% year-on-year and net profit decreased by 4.4% year-on-year. The financial report of
showed that total revenue in the third quarter was US$5.44 billion, compared with US$4.788 billion in the same period last year, a year-on-year increase of 13.6%. Net profit decreased by 4.4% year-on-year to US$803 million compared with US$840 million in the same period last year; gross profit decreased by 3.5% to US$1.763 billion compared with US$1.828 billion in the same period last year.
Before the release of this financial report, a survey by financial information provider FactSet showed that analysts had previously expected on average Micron Technology that revenue in the third quarter would reach US$5.31 billion, while actual total revenue exceeded expectations by US$130 million. Although net profit It has declined compared with the same period last year, but the capital market is obviously satisfied with the financial report of Micron Technology .
After the U.S. stock market opened this week, Micron Technology ’s stock price rose 6.01%. As of now, the share price of Micron Technology is US$49.70 per share, with a market value of US$55.217 billion.
Source: Snowball
From the perspective of specific department business:
Computer and Network Business Unit (CNBU) is responsible for selling memory products to clients, cloud servers, enterprises and network markets. The revenue of this department in the third fiscal quarter was US$2.218 billion. , an increase of 6.68% from US$2.079 billion in the same period last year. The
Mobile Business Unit (MBU) is responsible for the sales of memory products in the smartphone and other mobile device markets. Financial report data shows that the revenue of this department was US$1.525 billion, a year-on-year increase of 29.89%.
Storage Business Unit (SBU) is mainly engaged in SSD and component-level solutions, which are sold to the market in the form of components and wafers, as well as the sales of certain 3D Xpoint products. Micron Technology The financial report data released this time shows that the revenue of this department is US$1.014 billion, compared with US$813 million in the same period last year, a year-on-year increase of 24.72%. The
Embedded Business Unit (EBU) is responsible for selling memory and storage products to industrial markets such as automobiles. The revenue of this department was US$675 million, compared with last year's US$700 million decreased by 3.57% year-on-year.
Taken together, Micron Technology 's report card this time is still relatively eye-catching. Except for the embedded department, other business lines have achieved good growth. Before the financial report was released, according to Bloomberg data, Micron Technology had 27 buy ratings, 5 hold ratings, and 1 sell rating. Overall, institutions are optimistic about Micron's future development.
Micron Technology President and CEO Sanjay Mehrotra also said after the release of the financial report: "Despite the challenges facing the macro environment, Micron Technology 's outstanding performance in the third financial report promoted Strong quarterly revenue and EPS growth."
Take a closer look at this financial report, What specific information did Micron Technology convey to the outside world? The US Stock Research Institute dug out the following points:
Although electronic consumption has increased, it is lower than the same period. The business focus has shifted from smartphones to IDC
in In the revenue of Micron Technology , the sales of smartphone memory products ranks second among all revenue categories. It is an important main business of Micron Technology , and its sales account for about 28% of the total sales. The sales of smartphone memory products have achieved a large increase, but under the global macroeconomic environment, the prospects of the smartphone market are still not optimistic.
Shanghai Pudong International Research released the "2H20 Technology Industry Outlook" on June 19 this year: "Finding Certainty in Uncertainty" report pointed out that global smartphone shipments are expected to reach 1.22 billion units in 2020, a year-on-year decrease of 11%. According to analysts, overseas smartphone shipments will decline year-on-year in the second half of 2020. 12%, only slightly better than the 14% year-on-year decrease in the first half of the year. Specific to the domestic market, on April 13, according to data from the China Academy of Information and Communications Technology: In March 2020, the overall domestic mobile phone market shipped 21.756 million units, year-on-year. A decrease of 23.3%; from January to March 2020, the overall domestic mobile phone market shipments were 48.953 million units, a year-on-year decrease of 36.4%.
Source: IDC
The most intuitive and direct reason is the sharp year-on-year decline in smartphone market shipments. The COVID-19 epidemic has been raging around the world since the end of January 2020. With the promulgation of "stay at home orders" and "social bans", the upstream and downstream supply and production chains of the smartphone market have been severely affected. Micron Technology 's smartphone memory chip business Of course, we are not immune.
Micron Technology management also stated in the financial report: "The global health events caused by COVID-19 have caused a global economic downturn, and the global economic downturn has damaged our business, especially smartphones and electronic products. And some demand for cars fell. "This is also reflected in the financial report data. Compared with the first nine months of 2019, the revenue of the mobile business unit responsible for the sales of smartphone memory products fell by 15% year-on-year in the first nine months of 2020. In response to this challenge,
, Micron Technology announced that the company plans to transfer the supply of DRAM and NAND chips from the smartphone market to the data center (IDC) market. In fact, Micron Technology ’s total revenue announced in this financial report was higher than market expectations, mainly. It is also because orders from data center operators have made up for the decline in demand from smartphone manufacturers due to the new coronavirus epidemic.
The boom in working from home has driven demand for data center chips. Micron Technology said: Due to remote work, the demand for data center chips has increased. Gaming and e-commerce activity are increasing, and the data center business is performing strongly. Although the performance of smartphones, consumer electronics and automotive markets is lower than previously expected, market demand for laptops with home and virtual learning purposes is growing. Increase.
For Micron Technology 's revenue in the next quarter, analysts expect it to be between US$5.75 billion and US$6.25 billion; compared with this fiscal quarter, diluted earnings per share will be between US$0.78 and US$0.98. In terms of revenue of US$5.44 billion and diluted earnings per share of US$0.71, both data show an optimistic growth trend. This also shows the capital market’s confidence in the future development of Micron Technology
price. Fluctuations affect cash flow and reduce capital expenditures or weaken innovation capabilities.
Affected by the semiconductor industry cycle, fluctuations in the average selling price of semiconductor memory and storage products may have an adverse impact on Micron Technology 's business.
Micron Technology 's Q3 financial report. Disclosure: From 2014 to 2019, memory chip prices continued to fluctuate significantly. Specifically, from 2015 to 2016, the average selling price changed by 34%; in 2017-2018, the price fluctuations were the most severe, with the average price announced. The selling price change ratio is 36%; in the recent 2018-2019, the average selling price change ratio is 30%. Fluctuations in the price of
memory chips will directly affect the net profit of Micron Technology , thereby further affecting its cash flow. Since mid-2018, the semiconductor chip industry has been in a long-term downturn.According to Trendforce data, the average price of DRAM chips has dropped by half since peaking in the third quarter of 2018, and even more optimistic analysts do not believe that DRAM prices will improve before the end of 2020.
Source: Baidu picture
The impact of the continued low selling price of chips on Micron Technology cash flow is directly reflected in the financial report: In 2020, net cash generated from operating activities was US$6.035 billion, compared with 2019 of US$10.956 billion, a year-on-year decrease of 44.91%. The decrease was mainly due to a decrease in net income compared with the same period last year and changes in working capital. Net cash generated from investing activities was US$4.851 billion, a decrease of 46.01% compared with the same period in 2019.
The significant reduction in cash flow will also affect Micron Technology 's capital expenditures on technological innovation. Competition in semiconductor memory and storage products is fierce. Micron Technology needs to compete with Intel , Samsung and other large companies or enterprise groups in the market. These companies may have more capital to invest in technological innovation. As the semiconductor industry continues to slump and the epidemic has not dissipated, the ability of well-funded giants to resist risks is also significantly stronger.
The CEO of Micron Technology also said in the financial report: We may not be able to obtain sufficient cash flow for debt repayment and technological innovation. In order to develop new products and process technologies, support future growth, achieve operational efficiencies and maintain product quality, significant capital investments must be made in manufacturing technology, capital equipment and facilities, research and development, and product and process technologies.
Based on the financial report of Micron Technology , the performance of Micron Technology is still good. The capital market and investors have also proven their optimism for the future of Micron Technology with practical actions. However, compared with other semiconductor giants, Micron Technology 's ability to resist risks in a macroeconomic downturn is still poor, and it may encounter strong challenges in its technological innovation capabilities in the future. Whether Micron Technology can deliver a satisfactory answer in the next quarter will give the best answer after market verification.
Source of this article: US Stock Research Agency (meigushe) - aims to help Chinese investors understand the world, focusing on reporting on US technology stocks and Chinese concept stocks. Friends who are interested in US stocks should follow us
