01—Abstract
Summary
Summary of the 10-Q/A filed July 17, 2013. Cited figures are marked; the original filing is the authoritative source.
Micron Technology Inc. (MU) reported its fiscal second quarter 2013 results, ending February 27, 2013.
The company experienced a net loss of $286 milliona, a slight increase from the previous quarter, primarily driven by significant expenses related to currency hedging for the proposed Elpida acquisition and an impairment loss on asset sales. Despite the net loss, gross margins showed improvement, reaching 18% from 10% in the prior year's quarter, attributed to cost reductions and improved product mix, particularly in DRAM. Net sales saw a modest increase year-over-year, driven by the DRAM Solutions Group (DSG) and Embedded Solutions Group (ESG), though the Wireless Solutions Group (WSG) and NAND Solutions Group (NSG) faced headwinds from declining average selling prices, partially offset by increased sales volumes.
The company is actively pursuing a significant acquisition of Elpida Memory, Inc., which is subject to various legal and regulatory approvals. This acquisition, if completed, is expected to substantially increase Micron's wafer capacity and strengthen its market position.
Financially, Micron is managing its liquidity through operating cash flows and has recently secured new debt financing. However, the company anticipates substantial cash outlays related to the Elpida acquisition and ongoing capital expenditures, underscoring the importance of market conditions and strategic execution.
02—Key points
Key Highlights
- Micron reported a net loss of $286 million for Q2 FY2013, slightly worse than the prior quarter but similar to the prior year's quarter.
- Gross margin improved significantly to 18% compared to 10% in Q2 FY2012, driven by cost reductions and a more favorable product mix, especially in DRAM.
- Net sales increased 3% year-over-year to $2.08 billion, with the DRAM Solutions Group (DSG) and Embedded Solutions Group (ESG) showing growth.
- The proposed acquisition of Elpida Memory, Inc. is a major strategic initiative, subject to regulatory approvals, aiming to increase wafer capacity by approximately 45% and enhance market position.
- The company incurred significant losses on currency hedges related to the Elpida acquisition, impacting non-operating expenses.
- Capital expenditures are planned between $1.6 billion and $1.9 billion for fiscal year 2013, reflecting ongoing investment in technology and facilities.
- Liquidity appears adequate, with cash and equivalents of $2.23 billion, supported by operating cash flows and recent debt issuances.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2013, Micron Technology Inc lost $0.14.
- Revenue$2.08B100.0%
- Cost of revenue−$1.71B82.4%
- Gross profit$366.0M17.6%
- Operating costs−$389.0M18.7%
- Operating income−$23.0M1.1%
- Interest, other & tax−$263.0M12.7%
- Net income−$286.0M13.8%
04—Financials
Financial Highlights
Figures from 10-Q/AQ2 FY2013filed July 17, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $2.08B$2.01B | +3.4% |
| Cost of Revenue | $1.71B$1.80B | −4.8% |
| Gross Profit | $366.00M$210.00M | +74.3% |
| R&D Expenses | $214.00M$222.00M | −3.6% |
| SG&A Expenses | $123.00M$174.00M | −29.3% |
| Operating Income | -$23.00M-$204.00M | +88.7% |
| Interest Expense | $56.00M$35.00M | +60.0% |
| Net Income | -$286.00M-$282.00M | −1.4% |
| EPS (Basic) | $-0.28$-0.29 | +3.4% |
| EPS (Diluted) | $-0.28$-0.29 | +3.4% |
| Shares Outstanding (Basic) | 1.02B982.80M | +3.4% |
| Shares Outstanding (Diluted) | 1.02B982.80M | +3.4% |
05—Questions
Frequently Asked Questions
What is the current financial health of Micron based on this report?
Micron reported a net loss for the quarter, but gross margins showed a strong improvement year-over-year due to cost efficiencies and a better product mix. The company's liquidity remains adequate, supported by cash reserves and operating cash flow, though it is undertaking significant debt financing and preparing for a major acquisition.
What is the status and potential impact of the Elpida acquisition?
The acquisition of Elpida Memory, Inc. is a key strategic move for Micron. It is currently pending regulatory approvals and facing some creditor challenges. If successful, it is expected to significantly boost Micron's manufacturing capacity and market share in the memory industry. The transaction involves substantial cash outlays and has introduced volatility through currency hedging activities.
How are the different product segments performing?
The DRAM Solutions Group (DSG) and Embedded Solutions Group (ESG) showed year-over-year sales growth, primarily driven by increased sales volumes. The NAND Solutions Group (NSG) saw a slight sales decline year-over-year due to lower average selling prices, despite increased volumes. The Wireless Solutions Group (WSG) experienced significant sales declines due to market weakness and a transition to NAND Flash products.
What are the major risks or uncertainties highlighted in the report?
Key risks include the completion and terms of the Elpida acquisition due to ongoing legal challenges, fluctuations in semiconductor memory market prices, and the execution of significant capital expenditure plans. The company also notes that actual results could differ materially from forward-looking statements.
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