01—Abstract
Summary
Summary of the 10-K filed October 15, 2018. Cited figures are marked; the original filing is the authoritative source.
Micron Technology, Inc. reported a significant increase in net sales for the fiscal year ended August 30, 2018, up 50% year-over-year to $30.39 billiona, driven by strong performance across all business units, particularly Compute and Networking (CNBU), which saw a 77% increase in sales.
This growth was fueled by favorable market conditions and strong demand in key segments like cloud servers and graphics, coupled with effective execution of advanced technologies such as 1Xnm DRAM and 64-layer 3D NAND. Gross margins expanded considerably to 59%b from 42% in the prior year, reflecting improved pricing and cost efficiencies. The company demonstrated robust operational execution and technological leadership, transitioning to advanced manufacturing nodes and expanding its portfolio of high-value solutions, including SSDs and managed NAND.
Significant investments in Research and Development (R&D) continued, with R&D expenses increasing by 17% to $2.14 billionc, underscoring Micron's commitment to innovation in memory and storage technologies like 3D XPoint memory. The company also announced a significant $10 billion stock repurchase authorization, signaling confidence in its future financial performance and commitment to returning value to shareholders.
02—Key points
Key Highlights
- Net sales increased by 50% to $30.39 billion in FY2018, driven by strong demand and favorable market conditions.
- Gross margin improved significantly to 59% in FY2018 from 42% in FY2017, reflecting better pricing and cost efficiencies.
- Compute and Networking (CNBU) segment sales grew by 77%, highlighting strong demand in cloud, enterprise, and graphics markets.
- The company is advancing its technological leadership with 1Xnm DRAM and 64-layer 3D NAND production, and developing next-generation technologies.
- Research and Development expenses increased by 17% to $2.14 billion, signaling continued investment in innovation.
- Micron announced a $10 billion share repurchase authorization, indicating confidence and a commitment to shareholder returns.
- Despite strong growth, the company faces intense competition and market volatility in average selling prices, as noted in risk factors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Micron Technology Inc kept $0.47.
- Revenue$30.39B100.0%
- Cost of revenue−$12.50B41.1%
- Gross profit$17.89B58.9%
- Operating costs−$2.90B9.5%
- Operating income$14.99B49.3%
- Interest, other & tax−$856.0M2.8%
- Net income$14.14B46.5%
Where FY2018 revenue went
$30.39B- Net income: $14.14B, 47% of revenue
- Cost of revenue: $12.50B, 41% of revenue
- R&D: $2.14B, 7.0% of revenue
- SG&A: $813.0M, 2.7% of revenue
- Interest, other & tax: $856.0M, 2.8% of revenue
Kept 47% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed October 15, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $30.39B$20.32B | +49.5% |
| Cost of Revenue | $12.50B$11.89B | +5.2% |
| Gross Profit | $17.89B$8.44B | +112.1% |
| R&D Expenses | $2.14B$1.82B | +17.4% |
| SG&A Expenses | $813.00M$743.00M | +9.4% |
| Operating Income | $14.99B$5.87B | +155.5% |
| Interest Expense | $342.00M$601.00M | −43.1% |
| Net Income | $14.14B$5.09B | +177.8% |
| EPS (Basic) | $12.27$4.67 | +162.7% |
| EPS (Diluted) | $11.51$4.41 | +161.0% |
| Shares Outstanding (Basic) | 1.15B1.09B | +5.8% |
| Shares Outstanding (Diluted) | 1.23B1.15B | +6.5% |
05—Questions
Frequently Asked Questions
What were Micron's primary revenue drivers in fiscal year 2018?
Micron's primary revenue drivers in fiscal year 2018 were strong demand and favorable market conditions across its key segments, particularly in the Compute and Networking (CNBU) and Mobile Business Unit (MBU). The company saw significant growth due to increased sales volumes and improved average selling prices for DRAM products, and higher sales volumes for NAND products driven by SSD and mobile managed NAND solutions. Advancements in technologies like 1Xnm DRAM and 64-layer 3D NAND also contributed significantly to sales growth.
How did Micron's profitability change in fiscal year 2018 compared to the previous year?
Micron experienced a substantial improvement in profitability in fiscal year 2018. Gross margin increased to 59% from 42% in the prior year, and operating income more than doubled to $14.99 billion from $5.87 billion. This enhanced profitability was driven by a combination of higher net sales, improved average selling prices, and effective cost reductions through advancements in product and process technology.
What are Micron's key technological advancements and future focus areas?
Micron is focused on developing and ramping advanced memory and storage solutions. Key technological advancements include the production of 1Xnm DRAM and 64-layer 3D NAND. The company is also investing heavily in R&D for future technologies such as next-generation 3D NAND and 3D XPoint memory. Micron is also strategically shifting its product portfolio towards higher-value solutions like SSDs and managed NAND products.
What are the major risks and competitive challenges facing Micron?
Micron faces intense competition from major players like Samsung and SK Hynix. Key risks include volatility in average selling prices, which can lead to significant price declines that outpace cost reductions. The semiconductor market is highly competitive, and the company must continuously innovate and reduce manufacturing costs to remain competitive. Furthermore, global trade tensions, supply chain disruptions, and potential patent infringement claims are also significant risks.
06—Continue