- Benchmark analyst Mark Miller reiterated a Hold rating on Western Digital Corp WDC.
- Due to industry oversupply, Micron Technology, Inc MU NAND ASPs fell by mid-20% sequentially, resulting in negative margins.
- NAND pricing is below cash cost. Also impacting margins was a $1.43 billion inventory write-down. Before the write-down, inventories had swelled to record levels. The free cash flow was an outflow of $1.8 billion.
- The firm guided to a more significant than expected loss for 3Q.
- Customer inventories are down in several end markets. As a result, Micron expects an improving supply-demand balance in the months ahead with higher bit shipments.
- However, 2023 will be a challenging year for industry profitability. DRAM and NAND demand growth in 2023 will likely be below the long-term CAGRs.
- Data Center inventories will likely be healthy by the end of 2023.
- Micron believes its Data Center revenues have bottomed and sees sales growth in 3Q.
- Micron sees PC unit sales declining by a mid-single-digit percent in 2023 versus a high teen percent decline in 2022.
- Although still elevated, PC customer inventories have improved meaningfully.
- After falling 10% last year, Mobile demand in 2023 will likely be slightly down.
- NAND bit demand will likely grow by low teens in 2023. DRAM bit demand will likely grow 5% in 2023.
- Micron’s reported 2Q sales of $3.69 billion were $10 million below consensus expectations. The non-GAAP net loss was ($1.91) per diluted share. The inventory write-down impacted earnings by $1.34/share.
- Non-GAAP gross margins were a negative 31.4% versus 21.9% reported in the prior quarter and 47.2% in 2Q22.
- Under-utilization charges will likely be $0.9 billion in FY23, with almost half of these charges will be in 3Q.
- Micron’s non-GAAP 3Q EPS guidance for a net loss range of ($1.51) to ($1.65) per diluted share was below investor expectations of ($0.90) per diluted share, while the F3Q23 sales guidance range of $3.50 billion to $3.9 billion compared to investors’ sales expectation of $3.70 billion.
- Price Action: WDC shares traded higher by 5.04% at $36.35 on the last check Wednesday.
- Photo Via Company
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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