Shares of Micron Technology Inc. (MU – Analyst Report) went down 4.6% in after-hours trade on Tuesday after the company reported lower-than-expected first-quarter of fiscal 2015 revenues and provided a tepid second-quarter revenue guidance. After an attempted recovery, shares dropped another 2.34% Wednesday.
Adjusted earnings (excluding the impact of the Micron Memory Japan, Inc. acquisition and other one-time items) came in at 97 cents, which surpassed the Zacks Consensus Estimate of 92 cents. Adjusted earnings also increased from 77 cents reported in the year-ago quarter.
Quarter Details
Although Micron's revenues in the quarter increased 13.1% on a year-over-year basis to $4.57 billion, it lagged the Zacks Consensus Estimate of $4.60 billion. The substantial year-year-over increase in revenues could be mostly attributed to improving market conditions as well as an encouraging operating performance. Also, better-than-expected demand for both DRAM and NAND contributed to the overall revenue growth.
Moreover, DRAM product revenues increased approximately 9% on a sequential basis, primarily due to higher bit sales volume and constant ASPs (average selling price).
NAND Flash products revenues grew 14% on a sequential basis, primarily due to an increase in bit sales volume (up 20%), which was partially offset by a 6% decline in ASPs.
Coming to the Storage business Unit (SBU), revenues came in at $987 million during the quarter, up 9% on a sequential basis. Both client and enterprise SSDs revenues increased during the quarter. It is worth mentioning that Micron witnessed stable pricing in NAND chips.
Revenues from the Mobile Business Unit (MBU) came in at $940 million during the quarter, primarily aided by better-than-expected demand in mobile. Notably, the launch of Apple Inc.'s (AAPL – Analyst Report) iphone 6 drove segmental revenues.
The computing and networking business saw strong demand with revenues of $2.1 billion during the quarter, primarily due to a favorable pricing environment. Networking DRAM pricing improved 5% sequentially aided by LTE deployment in China and emerging markets.
Buoyed by a solid top-line performance and a favorable product mix, Micron's gross profit increased from $1.28 billion in the year-ago quarter to $1.64 billion. Gross margin came in at 35.8% versus 31.7% a year ago, primarily boosted by higher revenues.
Selling, general and administrative (SG&A) expenses increased 9.7% year over year to $193 million. Research and development (R&D) expenses came in at $376 million, 17.5% higher than the year-ago quarter.
Micron reported operating income of $1.09 billion, which significantly improved from $551 million reported in the year-ago quarter, primarily due to lower operating expenses as a percentage of revenues. Operating expenses, as a percentage of revenues, decreased 597 basis points on a year-over-year basis.
