Micron 4Q16 Earnings Call Notes

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Micron Technology’s (MU) CEO Mark Durcan on Q4 2016 Results

Continue to see the environment improve

“On the last call, we reported that while we were seeing signs of improvement in selected markets, we were uncertain of the extent and the duration of the improvements. During the quarter, we continue to see market conditions improve driven by both supply and demand fundamentals. Industry inventory appears lean and the current market outlook for both NAND and DRAM continues to be positive. Currently prices are increasing in number of segments, stabilizing in others and we’re seeing fewer segments showing residual declines.”

Although handset growth slowing, more content per phone

” China is becoming a more significant growth driver in mobile devices. Most of these devices are differentiated by large amounts of memory including up to 6 gigabytes low power DRAM. Additionally, the top of the line Apple and Samsung models now ship with 256 gigabytes of NAND and we see mid range Chinese handsets heading in the same direction in order to compete. Although there is a moderating pace of smartphone unit growth, significant content increases of both NAND and DRAM will generate strong overall bit growth.”

Seeing early signs of significant price movements

“Relative to market assumptions, we’re not going to get into the detail as always of the embedded margin because we don’t want to forecast the ASPs. But I think it’s fair to say that we’re seeing some early signs of significant price movements. And as we’ve done in the past, we want to wait before we get ahead of ourselves in projecting what may come as we move further out into the quarter but I do think that the trend is positive and the bias is positive.”

Channel inventory is very very tight

“if we think about inventory in the marketplace, certainly channel inventory I think is very, very tight, maybe one to two weeks or less than a week. At the major customers, we have less precision relative to that but I’d say, it’s certainly down and there is a sense of urgency at the large OEM customers as well.”

Ernie Maddock

Momentum has existed and has started to strengthen

” consistent with Mark’s prior comments, we are continuing to see positive momentum. I do think it’s important to understand that that momentum has existed and has started to strengthen and so as a result of its actual impact in our fiscal quarter with part of it already completed and we’re in negotiations for others, I think the trap we want to avoid is presuming that whatever the latest pricing news is gets retroactively applied across the entire quarter because that’s certainly not the environment that we’re living in. ‘

Own inventory is building

” we had some inventory built up that is now flowing through. However, we absolutely still continue to get more-and-more output from the factory and it’s going to be a couple of quarters before that inventory actually starts to decline, but we have a very clear view of an ability to decrease inventory meaningfully over the course of fiscal ‘17…we’re cognizant of the inventory position, we’d like to think that we anticipated that and share that with you. And we’re equally confident that the inventory will decline nearly every quarter in fiscal ‘17.”