10-QPeriod: Q2 FY2023

MICRON TECHNOLOGY INC Quarterly Report for Q1 Ended Dec 1, 2022

Filed December 22, 2022For Securities:MU

Summary

Micron Technology, Inc. reported a net loss of $195 million ($0.18 per diluted share) for the first quarter of fiscal year 2023, a significant downturn compared to the $2,306 million net income ($2.04 per diluted share) in the same period last year. This decline is primarily attributed to a sharp decrease in revenue, down 47% year-over-year to $4,085 million, driven by falling average selling prices and reduced bit shipments for both DRAM and NAND products. The company is experiencing a challenging industry environment characterized by global macroeconomic issues and customer inventory adjustments, leading to reduced demand and pricing pressures. In response to these market conditions, Micron is implementing cost-reduction measures, including workforce reductions, and has decreased wafer starts and capital expenditures. Despite the current headwinds, the company is continuing its strategic investments in new fabrication facilities in the U.S. to support long-term demand. The company ended the quarter with a strong cash and investments balance of $12.01 billion, providing liquidity to navigate the current market downturn.

Financial Highlights

51 data points
Beta

Revenue

$3.69B

-32.7% Gross Margin

Net Income

-$2.31B

-62.6% Net Margin

EPS (Diluted)

$-2.12

Total Assets

$66.52B

Cash & Equivalents

$9.89B

Free Cash Flow

-$1.86B

Financial Statements
Beta
Revenue$3.69B
Cost of Revenue$4.90B
Gross Profit-$1.21B
R&D Expenses$788.00M
SG&A Expenses$231.00M
Operating Income-$2.30B
Interest Expense$89.00M
Net Income-$2.31B
EPS (Basic)$-2.12
EPS (Diluted)$-2.12
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.09B

Key Highlights

  • 1Revenue declined sharply by 47% year-over-year to $4,085 million, signaling a significant market downturn.
  • 2The company reported a net loss of $195 million, a substantial reversal from a net income of $2,306 million in the prior year's quarter.
  • 3Both DRAM and NAND product sales saw significant year-over-year decreases due to falling average selling prices and reduced bit shipments.
  • 4Gross margin compressed significantly to 22% from 46% year-over-year, reflecting the challenging pricing environment.
  • 5Micron is undertaking cost-saving initiatives, including a 10% workforce reduction and reduced wafer starts/capital expenditures.
  • 6The company ended the quarter with $12.01 billion in cash and marketable investments, indicating strong liquidity.
  • 7Significant long-term investments in new U.S. fabrication facilities for future capacity expansion are ongoing.

Frequently Asked Questions

The primary driver behind Micron's revenue decline is the challenging industry environment characterized by global macroeconomic factors, customer inventory adjustments, and weak demand in several end markets. This has led to substantial reductions in both average selling prices (ASPs) and bit shipments for both DRAM and NAND products.

Micron is implementing several cost-saving and efficiency measures, including reducing wafer starts and capital expenditures. They are also undertaking a restructure plan to reduce headcount by approximately 10%, cutting external spending, implementing productivity programs, suspending the 2023 bonus, and reducing discretionary spending and executive salaries.

Despite the current market conditions, Micron continues to invest in its long-term strategy. This includes significant capital expenditures for new leading-edge memory manufacturing facilities in the United States (Boise, Idaho, and Clay, New York) to support future memory demand and leverage support from the U.S. CHIPS and Science Act.

Micron maintains a strong liquidity position, with cash and marketable investments totaling $12.01 billion as of December 1, 2022. This provides the company with financial flexibility to navigate the current downturn and fund its ongoing operations and strategic investments.