- Benchmark analyst Mark Miller reiterated a hold rating on Western Digital Corp WDC.
- Due to the oversupply of the industry Micron Technology, Inc mu NAND ASPs fell the mid-20% sequentially, resulting in negative margins.
- NAND prices are below cash costs. A $1.43 billion inventory write-down also impacted margins. Before the write-down, inventories had grown to record levels. Free cash flow was a $1.8 billion outflow.
- The company expected a bigger-than-expected loss for the third quarter.
- Customer inventories have fallen in several end markets. As a result, Micron expects the supply-demand balance to improve with higher bit shipments in the coming months.
- However, 2023 will be a challenging year for industry profitability. Demand growth for DRAM and NAND in 2023 is likely to be below long-term CAGRs.
- Data center stocks are expected to be healthy by the end of 2023.
- Micron believes its data center revenue has bottomed and sees revenue growth in Q3.
- Micron expects PC unit shipments to decline by a mid-single-digit percentage in 2023 versus a high-teens percentage decline in 2022.
- Although still elevated, PC customer inventories have improved significantly.
- After a 10% drop last year, mobile demand is likely to fall slightly in 2023.
- NAND bit demand is likely to grow by low powers of ten in 2023. DRAM bit demand is likely to grow 5% in 2023.
- micron reported Q2 revenue of $3.69 billion were $10 million below consensus expectations. Non-GAAP net loss was ($1.91) per diluted share. Inventory write-down impacted earnings by $1.34/share.
- Non-GAAP gross margin was negative 31.4% compared to 21.9% in the prior quarter and 47.2% in the second quarter of 2022.
- Underutilization charges are expected to be $0.9 billion in FY23, with almost half of those charges expected in Q3.
- Micron’s non-GAAP third quarter EPS guidance for a net loss of ($1.51) to ($1.65) per diluted share came in below investor expectations of ($0.90) per diluted share during the F3Q23.. .
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