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Analyzing the Top Tech Movers Last Week

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Part 4
Analyzing the Top Tech Movers Last Week PART 4 OF 4

Micron Technology: Shares Continued to Rise Last Week

Shares of Micron rose 10% last week

Shares of semiconductor (SMH) firm Micron Technology (MU) rose 10% in the week ending March 3, 2017. Recently, Micron updated its revenue guidance. It expects revenue of $4.65 billion in 2Q17 with non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.86. Analysts expect the firm to post revenue of $4.58 billion with EPS of $0.73 in fiscal 2Q17.

Shares of Micron rose over 50% in 2016 after a disappointing in 2015. Earlier, Micron expected revenue of $4.5 billion in fiscal 2Q17.

Key drivers for Micron

Micron is a pure-play memory manufacturer. So, its earnings are highly sensitive to memory market conditions, especially DRAM (dynamic random access memory), from which it earns 61.0% of its revenue.

Micron Technology: Shares Continued to Rise Last Week

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The company has been investing heavily in technology upgrades to reduce costs. Its manufacturing costs are higher than Samsung (SSNLF) and SK Hynix’s costs. As a result, Micron’s revenues fell in fiscal 2015 and fiscal 2016 when DRAM prices fell.

Micron benefited from a price rise in DRAM combined with Samsung (SSNLF) and SK Hynix’s exit from DRAM production. Micron also revised the guidance for its fiscal 1Q17 results. Micron reported its first YoY (year-over-year) rise in revenue of 18.5% to $3.97 billion in fiscal 1Q17. Micron beat its own revised guidance of $3.95 billion.

Profit margins

In fiscal 1Q17, Micron’s non-GAAP (generally accepted accounting principles) gross margin was 25.0%—a rise by seven percentage points from fiscal 4Q16. The margins also include profit earned from the shipment of 3D NAND. Micron’s non-GAAP operating margin rose from 1.0% in fiscal 4Q16 to 11.0% in fiscal 1Q17. It was driven by cost savings from restructuring and increasing memory prices. The company is increasing its spending on research and development. Its operating expenses could rise from $594.0 million in fiscal 1Q17 to $615.0 million in fiscal 2Q17.

Micron expects its non-GAAP operating income to double in fiscal 2Q17, resulting in an operating margin of ~19.0%.

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