Micron, the Memory specialist has some nasty surprise for investors as its fiscal 2019’s first quarter financial results came out. Results were not problematic. However, they were in sync with what is being expected by analysts. Financial guidance of the company for the subsequent quarter was not that good, missing significantly what already muted analyst expectations. Taking a close look becomes necessary to know what the company management states with regards to the earnings call.
3 essential things which investors are not to miss out from the micron earnings date call
- Enhancing overall efficiency: With 2018 calendar ending on unpredicted profitability for both the industry and Micron, experts are of the belief that the immediate future is probably of weaker market conditions The company CFO stated that the management is trying to manage actively all operating expenses. This is being achieved through implementation of expense controls in all segments of the company, including tighter headcount controls, discretionary spending reduction and holiday-work schedule slowdowns. It clearly appears that the company will be trying to optimize more value from each and every dollar spent in operation costs. Value efficiency is generally valued by investors, which is considered to become much more valuable as business contracts when compared to boom time. Although steps are being taken to optimize cost structure, necessary investments are being made on technology and products. Technology investments do offer long lead times. Without proper investment today, Micron will find itself to be a less competitive product with lesser demand, thus hurting both gross margin and market share.
- Buybacks: $10 billion share-repurchase programs was announced sometime back by the company. The management during the call spoke to investors and informed them of the program of starting execution. The recent quarter saw the company snapping up own stock of $1.8 billion. The quarterly presentation was found good for shares outstanding of 3.5%. During the fiscal second quarter, the company expects to remain active with their stock buybacks, while making progress on their $10 billion repurchase program. This is by returning to shareholders about 50% of ongoing free cash-flows. Year to date, stocks are down. While announcing the repurchase program, the company is likely to purchase more stock significantly with this program in proper place, more than what its position would have been when it enjoyed higher share prices.
- CPU shortage: The 2018 Q4 earnings call saw a shortage of CPU in client computing space. This affected adversely the Q1 2019 outlook. That impact was not quantified by the management back then. Intel is not in a position to meet all demands during the 4th quarter for low-end PC processors. CPU shortages have been creating a major negative impact on Micron production and sales.
However, experts are of the opinion that investors of Micron are likely to benefit from listening to the next earnings call of Intel, something that is to take place during late January. This is to ascertain as to when CPU shortage is likely to subside.