01—Abstract
Summary
Summary of the 10-K filed October 17, 2019. Cited figures are marked; the original filing is the authoritative source.
Micron Technology, Inc. reported revenues of $23.4 billiona for fiscal year 2019, a decrease of 23% from $30.4 billion in fiscal year 2018.
This decline was primarily attributed to significant pricing declines in both DRAM and NAND products due to a challenging memory market environment, supply and demand imbalances, and customer inventory corrections. Despite the revenue decrease, Micron demonstrated strong technological advancements, including progress in its 1Xnm, 1Ynm, and 1Znm DRAM technologies and ramped up production of its 96-layer and 128-layer 3D NAND technologies. The company is strategically investing in manufacturing capabilities, including expansions in Singapore and Taiwan, and is in the process of acquiring Intel's interest in their IMFT joint venture.
Financially, while gross margins decreased from 59% in 2018 to 46% in 2019 due to pricing pressures, Micron maintained significant operating income of $7.38 billionb. The company also managed its debt effectively, with a reported debt of $5.85 billion at fiscal year-end 2019, and continued to invest heavily in research and development to maintain its competitive edge.
Key risks highlighted include volatility in average selling prices, intense competition, and trade tensions, particularly concerning sales to Huawei which represented 12%c of total revenue in 2019. The company's financial health remains robust, supported by strong cash flow generation and strategic investments in future technologies.
02—Key points
Key Highlights
- Revenue declined 23% year-over-year to $23.4 billion in FY2019, driven by significant pricing decreases in DRAM and NAND markets.
- Gross margin decreased to 46% in FY2019 from 59% in FY2018 due to pricing pressures, although cost reductions partially offset this.
- The company continued to advance its technology roadmap, achieving significant production milestones with 1Xnm, 1Ynm, and 1Znm DRAM, and ramping 96-layer and 128-layer 3D NAND.
- Strategic investments in manufacturing, including a new Singapore cleanroom expansion and a Taiwan back-end facility, aim to support future growth.
- Micron is acquiring Intel's stake in the IMFT joint venture for approximately $1.4 billion, expected to close in early 2020.
- The company repurchased approximately $2.66 billion of its common stock in FY2019 under a $10 billion authorization.
- Sales to Huawei represented 12% of total revenue in 2019, with operations temporarily impacted by U.S. trade regulations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Micron Technology Inc kept $0.27.
- Revenue$23.41B100.0%
- Cost of revenue−$12.70B54.3%
- Gross profit$10.70B45.7%
- Operating costs−$3.33B14.2%
- Operating income$7.38B31.5%
- Interest, other & tax−$1.06B4.5%
- Net income$6.31B27.0%
Where FY2019 revenue went
$23.41B- Cost of revenue: $12.70B, 54% of revenue
- Net income: $6.31B, 27% of revenue
- R&D: $2.44B, 10% of revenue
- SG&A: $836.0M, 3.6% of revenue
- Interest, other & tax: $1.06B, 4.5% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed October 17, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $23.41B$30.39B | −23.0% |
| Cost of Revenue | $12.70B$12.50B | +1.6% |
| Gross Profit | $10.70B$17.89B | −40.2% |
| R&D Expenses | $2.44B$2.14B | +14.0% |
| SG&A Expenses | $836.00M$813.00M | +2.8% |
| Operating Income | $7.38B$14.99B | −50.8% |
| Interest Expense | $128.00M$342.00M | −62.6% |
| Net Income | $6.31B$14.14B | −55.3% |
| EPS (Basic) | $5.67$12.27 | −53.8% |
| EPS (Diluted) | $5.51$11.51 | −52.1% |
| Shares Outstanding (Basic) | 1.11B1.15B | −3.3% |
| Shares Outstanding (Diluted) | 1.14B1.23B | −7.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of Micron's revenue decline in fiscal year 2019?
The primary driver of Micron's revenue decline in fiscal year 2019 was a significant decrease in average selling prices for both DRAM and NAND products. This was caused by a challenging memory market environment, characterized by supply and demand imbalances and customer inventory corrections.
What is the significance of Micron's acquisition of Intel's interest in IMFT?
Micron's acquisition of Intel's interest in the IMFT joint venture is significant as it will give Micron full ownership and control over their 3D XPoint memory technology development and production. This is a strategic move to enhance their position in the high-performance memory and storage market, particularly for emerging applications like AI and machine learning.
How did trade restrictions, particularly concerning Huawei, impact Micron's business in fiscal year 2019?
Trade restrictions, specifically the U.S. government's Entity List addition of Huawei, impacted Micron's business by causing a temporary suspension of shipments to Huawei, which accounted for 12% of Micron's total revenue in 2019. While shipments of certain products resumed in Q4 2019, the restrictions created uncertainty and potential long-term competitive disadvantages. The full impact was an adverse effect on the company's business and results of operations.
What is Micron's outlook on capital expenditures and technology development?
Micron plans to invest significantly in capital expenditures, estimating $7 billion to $8 billion for fiscal year 2020, primarily focused on technology transitions and product enablement. This investment underscores their commitment to developing and manufacturing advanced memory and storage solutions, including next-generation DRAM and NAND technologies, to maintain their competitive edge.
06—Continue