Research firm Stifel published an industry report yesterday, April 3rd, discussing Micron Technology, Inc. (NASDAQ:MU)’s earnings report for the quarter ending in February. In general, Micron’s quarterly numbers came in somewhat better than expected. In specific, the report noted that revenue for February quarter came in at $4.107 billion vs. the Stifel estimate of $4.05 billion and the consensus analyst estimate of $3.99 billion.
Back in December of last year, David Einhorn’s Greenlight Capital revealed it had taken a significant stake in Micron Technology, Inc. (NASDAQ:MU).
Micron Technology’s ongoing transition to NAND
NAND flash memory is a non-volatile storage technology that does not require power to retain data. The technology has finally reached a level of development where it’s use is economical in a wide variety of devices, and Micron Technology, Inc. (NASDAQ:MU) is in the process of switching a significant chunk of its DRAM production into NAND production.
The Stifel report discusses Micron Technology, Inc. (NASDAQ:MU)’s progress regarding the ongoing conversion to NAND production. “Micron reported 35% trade NAND bit production growth in the February quarter, vs. 17% growth in the prior quarter. The company had expected bit production growth of trade NAND to increase sequentially in the high-teens range in the February quarter. Micron reported that bit production growth was high due in part to the continued conversion of its Fab 7 facility in Singapore from DRAM to NAND.”
Stifel analyst Kevin Cassidy also highlighted the growing importance of NAND to Micron Technology, Inc. (NASDAQ:MU)’s revenues. “Micron reported trade NAND at 25% of total revenue, vs. 23% in the prior quarter. Gross margins for NAND were in the high-20% range, vs. the low- to mid-30% range in the prior quarter. The company expects another 2pp decline in GM% in the current quarter.”
Rapid public cloud growth supporting DRAM server business
The Stifel report also highlights the rapid growth in the public cloud is providing strong support to the DRAM server sector. “Micron reported that it had record DRAM bit shipment growth in specialty markets including servers, consumer and graphics segments. Micron Technology, Inc. (NASDAQ:MU)’s DRAM server business achieved 68% bit growth in F2Q14. Micron believes that strong growth in public clouds is driving its DRAM server results, but it also highlighted that its competitive position of providing its server customers with unique solutions (i.e. hybrid memory computing) is also driving demand for its server DRAM.”