Micron Raises Q1 Targets, Faces Higher Expenses
On November 29th, Micron, a prominent U.S. storage chip manufacturer, unveiled an upward revision to its financial projections for the first quarter of fiscal year 2024 (covering September to November) in a press release ahead of the U.S. stock market opening on the 28th.
Micron cited improvements in supply and demand dynamics, along with pricing enhancements, as factors contributing to the anticipation of achieving $4.7 billion in revenue for the first quarter of fiscal year 2024. This figure surpasses the prior estimated median of $4.4 billion, with a deviation of plus or minus $200 million. The Non-GAAP loss per share is forecasted to be $1, outperforming the previous estimate of a loss of $1.07, with a deviation of plus or minus $0.07. Additionally, the Non-GAAP gross margin is expected to range between -0.5% and 0%, exceeding the previous estimate of -4.0%, with a deviation of plus or minus 2.0%.
Nevertheless, Micron foresees adjusted Non-GAAP operating expenses for the first quarter of fiscal year 2024 to be $990 million, surpassing the earlier projection of $900 million, with a deviation of plus or minus $15 million.
Reports from Reuters, Investor’s Business Daily, and other international media outlets highlighted Micron CEO Sanjay Mehrotra's remarks at the UBS Global Mobility Technology Conference on the 28th. Despite significantly elevated operating expenses during the first quarter, primarily attributed to increased research and development costs, Mehrotra expressed confidence in an anticipated decline in the second quarter (December 2023 to February 2024).
Mehrotra conveyed optimism regarding Micron's pricing outlook, envisioning a swifter-than-expected transition from losses to profits. He forecasted 2025 as a record-breaking year for the industry, with 2024 positioned as a year of recovery.
In response to the impact of higher-than-expected Q1 operating expenses, Micron's stock price experienced a 1.79% decline on the 28th, closing at $76.12 per share, marking a new low since November 13th.
Wedbush Securities analyst Matthew Bryson observed that elevated expectations for Micron's financial report were rooted in the robust fundamentals of memory. Although Micron's financial forecast exceeded previous estimates, it fell short of overly optimistic expectations. Bryson noted that Micron's earlier forecasts were deemed "extremely conservative," and the company surpassing expectations aligned with projections. He expressed ongoing optimism about Micron, citing the continual improvement in the storage market and anticipating significant financial progress in subsequent quarters. Furthermore, he suggested the possibility of a memory market shortage later in 2024 as standard server demand returns to normal.
