On The Fly: What to watch for in Micron's earnings report
Micron (MU) is scheduled to report results of its fiscal fourth quarter after the market close on September 26, with a conference call scheduled for 4:30 pm ET. What to watch for: 1. EPS CONSENSUS HIGHER: Along with its last report, Micron guided for Q4 earnings per share in the range of $1.74-$1.87 on revenue of $5.7B-$6.1B. At the time, analysts expected the company to report Q4 EPS of $1.57 on revenue of $5.62B, but those figures have since risen to $1.84 and $5.96B, respectively. 2. DRAM DEMAND: Micron said on its third quarter conference call that it expects to achieve meaningful NAND and DRAM output by the end of fiscal 2017 and guided for calendar year 2017 DRAM industry bit supply growth in the range of 15%-20%. The company added at the time that it sees "healthy" industry demand persisting into 2018. Roughly two months later, Micron chief financial officer Ernie Maddock said at Citi's Global Technology Conference that DRAM pricing continues to trail spot pricing, and that the company continues to see "very strong" demand from customers. Maddock added at the time that the pricing environment for DRAM remains "good." 3. GARTNER PC DEMAND: Global PC shipments totaled 61.1M units in the second quarter of 2017, marking a 4.3% slide from the same quarter in the previous year, according to preliminary results by Gartner published in mid-July. Gartner noted at the time that the PC industry is in the midst of a five year slump, and Q2 was the 11th straight quarter of declining shipments. "Higher PC prices due to the impact of component shortages for DRAM, solid state drives and LCD panels had a pronounced negative impact on PC demand in the second quarter of 2017," said Mikako Kitagawa, principal analyst at Gartner "The approach to higher component costs varied by vendor. Some decided to absorb the component price hike without raising the final price of their devices, while other vendors transferred the costs to the end-user price." 4. GARTNER SEMICONDUCTOR DEMAND: Gartner also published a report in July saying that worldwide semiconductor revenue is expected to total $401.4B in 2017, an increase of 16.8% from 2016. This would be the first time semiconductor revenue has surpassed $400B, Gartner noted at the time. Gartner research VP Andrew Norwood said that the revenue forecast was driven by memory vendors, such as Micron, being able to increase their price for DRAM and NAND.