In the fiscal fourth-quarter Micron Technology (NASDAQ:MU) needed to produce something to maintain the status of a high-flying stock but this could not. The company reported a significant decline in earnings and revenue in the quarter.
Weak Memory Prices Hurting Micron
In the last three quarters, the company’s top and bottom lines have declined by huge margins. In Q4 YoY revenue dropped 42% to around $4.87 billion taking a hit after DRAM and NAND chips saw a significant decline in selling prices.
In the last quarter, 63% of the company’s revenue was from the DRAM segment. Sales from the segment declined 48% annually despite an increase in bit shipments. The decline was a result of lower DRAM average selling price with management pointing out that there was a 20% sequential drop in DRAM ASPs. The company reported a 30% drop in DRAM ASPs for the whole fiscal year.
Micron experienced the same in the NAND chips segment where it saw its YoY revenue declined 32%. On a sequential basis, the NAND chip ASPs declined in single digits with the company reporting a full-year mid-40% drop in NAND ASPs.
The huge drop in memory chips ASPs constricted the company’s margins in the last quarter. Non-GAAP gross margin was cut by half relative to the same period last year, to around 30.6% in Q4.
Micron expects earnings per share of $0.46 in Q1 2020
For Micron investors the gloomy outlook seems to continue and a turnaround is unlikely for now. For Q1 2020 the company expects earnings of around $0.46 per share on sales of $5 billion.
The numbers are not promising compared to a year ago when earnings were $2.97 per share on revenue of $7.91 billion. The 26.5% non-GAAP gross margin forecast for Q1 is an indication that the company still expects weaker memory prices.
The company is however optimistic that things could turn around next year with demand for chips expected to exceed supply. CEO Sanjay Mehrotra indicated that bit-demand will grow by 20% exceeding supply.