There are some silly typos and even at least one misstatement of fact in this article, but it may still be modestly useful as a point of comparison for today's earnings report from Micron.
| Micron Reports Earnings Today. Here's What to Expect. -- Barrons.com |
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| Dow Jones Newswires June 29, 2020 08:05:00 AM ET
As the Covid-19 pandemic continues to wreak havoc across economies around the world, memory maker Micron Technology has already set clear expectations for investors as it reports earnings Monday after the closing bell.
But there are still good reasons to tune in to the results.
What investors do know about the earnings came from the company Chief Executive the day before the fiscal third quarter closed in May. At the virtual investor conference Micron (Ticker: MU) Chief Executive Sanjay Mehrotra laid out the numbers and a few details: revenue of $5.2 billion to $5.4 billion and a profit of 61 cents to 66 cents a share. Both of the main types of memory it sells -- for storage and computing -- were doing especially well in markets where many people worked from home or with exposure to e-commerce.
Micron, which remains cheapest chip stocks, said it expects adjusted earnings of 75 cents to 80 cents a share, outside the high end of its March guidance of 40 cents to 70 cents a share.
"We are cautiously optimistic about sustaining our current business performance in fiscal fourth quarter as well," Mehrotra said at the virtual conference. Micron didn't offer anything more concrete, meaning investors should keep a lookout Monday for commentary and guidance about the next quarter, especially in terms of what the company is saying about the coronavirus.
Wall Street is confident that Micron will even beat the guidance it issued roughly a month ago, according to analysts polled by FactSet. Currently, analysts model earnings of 75 cents a share on sales of $5.2 billion. That represents a modest dip from the year-ago period, when Micron booked earnings of $1.05 a share and sales of $5.27 billion.
Despite Micron's predictions and Wall Street's own loft expectations, it's worth recalling that BMO Capital Markets analyst Ambrish Srivastava's said June 23, that memory prices are going south and that's going to hurt Micron over the next several quarters.
In the note, Srivastava said that his checks on the spot pricing for memory suggested that the drop his team saw is likely to extend beyond immediate demand, and soon will be reflected in longer-term contracts. Such price drops will last well beyond a single quarter and his analysis indicates softness in memory prices could continue for as many as three quarters.
Mizuho Securities analyst Vijay Rakesh wrote in a client note that one area investors should watch closely is what Micron says about data centers and capital expenditures -- which management did not address during its May update. The company revised expectations for capital expenditure plans downward but hasn't offered guidance.
Keybanc Captial Markets analyst Weston Trigg acknowledged in a note that the guidance announced in May was strong, but predicts the second half of the year will show declines. The surge in server demand during the first half of the year will slow, people will opt for midrange phones -- which translates to fewer memory sales -- and personal computers won't sell as well amid coronavirus-related economic conditions. The following year is another story, however, and Micron is well positioned after some of the churn diminishes.
Micron shares have retreated 9.8% this year, while the S&P 500 Index has fallen 6.9.
Write to Max A. Cherney at max.cherney@barrons.com |
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