01—Abstract
Summary
Summary of the 10-Q filed January 10, 2012. Cited figures are marked; the original filing is the authoritative source.
Micron Technology Inc. reported a net loss of $187 milliona, or $0.19 per diluted share, for the quarter ended November 30, 2011.
This contrasts sharply with a net income of $155 millionb, or $0.15 per diluted share, in the same quarter of the prior year. The decline was driven by a significant decrease in net sales, which fell to $2.09 billion from $2.25 billion year-over-year, and a substantial increase in cost of goods sold. The company's gross margin contracted considerably, impacting overall profitability.
The company's financial performance reflects the challenging dynamics within the semiconductor memory market, characterized by declining average selling prices for its key products, DRAM and NAND Flash. While the company made efforts to reduce manufacturing costs, these were insufficient to offset the revenue pressures.
Micron's balance sheet shows total assets of $14.21 billionc and total liabilities of $4.50 billion, with a notable decrease in cash and equivalents to $1.92 billion from $2.16 billion at the prior quarter end. Significant investments in property, plant, and equipment continue, highlighting the capital-intensive nature of the business.
02—Key points
Key Highlights
- Reported a net loss of $187 million for the quarter, a significant decline from a net income of $155 million in the prior year's comparable quarter.
- Net sales decreased by 7% year-over-year to $2.09 billion, primarily due to lower average selling prices in DRAM and NOR Flash products.
- Gross margin significantly declined to 15% from 23% year-over-year, indicating pressure on profitability due to falling prices and rising costs.
- DRAM Solutions Group (DSG) experienced a 27% sales decline and a shift to an operating loss of $139 million, primarily due to falling DRAM average selling prices.
- NAND Solutions Group (NSG) showed resilience with a 36% year-over-year sales increase, driven by higher volumes, though average selling prices also declined.
- The company continues to invest heavily in property, plant, and equipment, with capital expenditures of $697 million during the quarter.
- Cash and equivalents decreased to $1.92 billion from $2.16 billion in the prior quarter.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2012, Micron Technology Inc lost $0.14.
- Revenue$2.01B100.0%
- Cost of revenue−$1.80B89.5%
- Gross profit$210.0M10.5%
- Operating costs−$414.0M20.6%
- Operating income−$204.0M10.2%
- Interest, other & tax−$78.0M3.9%
- Net income−$282.0M14.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2012filed January 10, 2012Financial Statements
Q2 FY2012 against Q2 FY2011
| Line item | Q2 FY2012Q2 FY2011 | Change |
|---|---|---|
| Revenue | $2.01B$2.26B | −11.0% |
| Cost of Revenue | $1.80B$1.82B | −1.3% |
| Gross Profit | $210.00M$435.00M | −51.7% |
| R&D Expenses | $222.00M$186.00M | +19.4% |
| SG&A Expenses | $174.00M$146.00M | +19.2% |
| Operating Income | -$204.00M$179.00M | −214.0% |
| Interest Expense | $35.00M$28.00M | +25.0% |
| Net Income | -$282.00M$72.00M | −491.7% |
| EPS (Basic) | $-0.29$0.07 | −514.3% |
| EPS (Diluted) | $-0.29$0.07 | −514.3% |
| Shares Outstanding (Basic) | 982.80M988.10M | −0.5% |
| Shares Outstanding (Diluted) | 982.80M1.04B | −5.3% |
05—Questions
Frequently Asked Questions
What is the primary reason for the significant decline in profitability compared to the previous year?
The primary reason for the sharp decline in profitability is the significant decrease in net sales, driven by falling average selling prices for DRAM and NAND Flash products. This, coupled with an increase in the cost of goods sold, led to a substantial contraction in gross margin from 23% to 15% year-over-year.
How are the different product segments performing?
The DRAM Solutions Group (DSG) is facing significant challenges, with sales down 27% and a substantial operating loss. The NAND Solutions Group (NSG) is performing better, with a 36% increase in sales year-over-year due to higher volumes, despite declining average selling prices. The Wireless Solutions Group (WSG) saw a 27% sales decrease, while the Embedded Solutions Group (ESG) had relatively stable sales.
What is the company's cash position and how is it being utilized?
Micron's cash and equivalents decreased to $1.92 billion. The company is heavily investing in its future, as evidenced by capital expenditures of $697 million during the quarter, primarily for property, plant, and equipment. This investment reflects the ongoing need to maintain and advance its manufacturing capabilities in the capital-intensive semiconductor industry.
Are there any significant legal or contingent liabilities that investors should be aware of?
The company is involved in several ongoing legal proceedings, including patent infringement litigations (notably with Rambus and others) and antitrust matters, particularly related to DRAM price-fixing allegations. While a jury recently found in Micron's favor on one antitrust claim, and a settlement was reached for US indirect purchaser cases, these matters carry inherent risks and could potentially result in significant liabilities or require material changes to business operations if outcomes are adverse.
06—Continue