01—Abstract
Summary
Summary of the 10-K filed October 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Micron Technology, Inc.'s (MU) 2010 10-K filing reveals a significant rebound and strategic expansion following a challenging period.
The company saw a substantial increase in net sales, driven by a strong recovery in DRAM average selling prices and increased unit shipments for both DRAM and NAND Flash products. This performance was further bolstered by the strategic acquisition of Numonyx, which expanded Micron's product portfolio and manufacturing scale, particularly in NOR Flash and other memory technologies. Financially, the company moved from a net loss in the previous year to a healthy net income, indicating a return to profitability.
Key drivers included improved gross margins attributed to better pricing and cost reductions. Despite facing ongoing industry competition and significant legal challenges, including antitrust and patent litigations, Micron demonstrated resilience. The company also highlighted its ongoing investment in advanced process technologies and a diversified product strategy, aiming to maintain its competitive edge in the dynamic semiconductor market.
02—Key points
Key Highlights
- Net sales increased significantly by 77% to $8.48 billion in 2010, recovering from a decline in 2009.
- The company returned to profitability, reporting a net income of $1.90 billion in 2010, a substantial improvement from a net loss of $1.99 billion in 2009.
- Micron completed the acquisition of Numonyx Holdings B.V. on May 7, 2010, expanding its product offerings and manufacturing scale, particularly in NOR Flash and Phase Change memory.
- DRAM average selling prices increased by 28% in 2010 after significant declines in prior years, while DRAM unit shipments grew substantially.
- NAND Flash sales saw a 28% increase in 2010, driven by a 55% increase in unit sales, although average selling prices declined by 18%.
- The company entered into a 10-year patent cross-license agreement with Samsung Electronics, receiving $275 million.
- Micron is investing heavily in capital expenditures, with planned spending of $2.4 billion to $2.9 billion for 2011 to support advanced manufacturing technologies.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Micron Technology Inc kept $0.22.
- Revenue$8.48B100.0%
- Cost of revenue−$5.77B68.0%
- Gross profit$2.71B32.0%
- Operating costs−$1.13B13.3%
- Operating income$1.59B18.7%
- Interest, other & tax$261.0M3.1%
- Net income$1.85B21.8%
Where FY2010 revenue went
$8.48B- Cost of revenue: $5.77B, 68% of revenue
- Operating income: $1.59B, 19% of revenue
- R&D: $624.0M, 7.4% of revenue
- SG&A: $528.0M, 6.2% of revenue
Kept 19% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed October 26, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $8.48B$4.80B | +76.6% |
| Cost of Revenue | $5.77B$5.24B | +10.0% |
| Gross Profit | $2.71B-$440.00M | +716.8% |
| R&D Expenses | $624.00M$647.00M | −3.6% |
| SG&A Expenses | $528.00M$354.00M | +49.2% |
| Operating Income | $1.59B-$1.68B | +194.8% |
| Interest Expense | $178.00M$182.00M | −2.2% |
| Net Income | $1.85B-$1.88B | +198.3% |
| EPS (Basic) | $2.09$-2.35 | +188.9% |
| EPS (Diluted) | $1.85$-2.35 | +178.7% |
| Shares Outstanding (Basic) | 887.50M800.70M | +10.8% |
| Shares Outstanding (Diluted) | 1.05B800.70M | +31.2% |
05—Questions
Frequently Asked Questions
What was Micron's financial performance in fiscal year 2010 compared to 2009?
Micron experienced a significant turnaround in fiscal year 2010. Net sales surged by 77% to $8.48 billion, up from $4.80 billion in 2009. Most notably, the company returned to profitability, reporting a net income of $1.90 billion compared to a net loss of $1.99 billion in the prior year. This improvement was driven by a rebound in DRAM pricing and increased sales volume for both DRAM and NAND Flash products, alongside the acquisition of Numonyx.
What impact did the Numonyx acquisition have on Micron?
The acquisition of Numonyx on May 7, 2010, was a key strategic move for Micron. It expanded their product portfolio to include NOR Flash and Phase Change memory technologies, increased manufacturing scale, and provided access to Numonyx's customer base. Financially, it contributed $635 million in net sales and represented a significant step in strengthening Micron's position in various memory markets.
What are the major risks or legal matters that Micron highlighted in this filing?
Micron highlighted several significant risks, including intense competition in the semiconductor memory market, the cyclical nature of average selling prices, and the need to continually reduce per-gigabit manufacturing costs. The company also disclosed ongoing litigation, including significant antitrust lawsuits related to DRAM price-fixing allegations and patent infringement claims from Rambus. Additionally, the company noted potential disruptions related to the expiration and integration of its TECH joint venture with HP and Canon.
How is Micron investing in future growth and technology?
Micron is heavily investing in research and development to advance its product and process technologies, focusing on smaller line-width processes and new memory architectures. The company also plans substantial capital expenditures, estimating $2.4 billion to $2.9 billion for 2011, to support manufacturing upgrades and the development of next-generation memory products. Strategic partnerships, such as the joint ventures with Intel for NAND Flash and Nanya for DRAM, are also crucial to sharing R&D costs and expanding manufacturing capabilities.
06—Continue