Micron CEO Sanjay Mehrotra

Micron (MU) reports quarterly earnings after hours. Analysts expect revenue of $7.28 billion and eps of $2.74. The revenue estimate implies 7% growth Q/Q. Investors should focus on the following key items.

Gaudy Top Line Growth

A year ago Micron’s operations were characterized by slowing revenue growth an declining gross margins. My biggest fear was that an aggressive Samsung was encroaching on the company’s turf in mobile DRAM, and trying to re-position itself as a supplier for Apple’s (AAPL) iPhones. What a difference a year makes. In the most recent quarter Micron grew revenue 71% Y/Y. Revenue from the Compute & Networking Business Unit (“CPBNU”) more than doubled, driven by higher sales from the enterprise market.

Micron also benefited from increasing memory for content servers, increasing sales of its GDDR5 and GDDR5X products used for powerful graphics within the gaming industry, and improved pricing in the DRAM market. CPBNU is also the company’s largest operating segment, representing 47% of total revenue. The Storage Business Unit’s (“SBNU”) sales of Trade NAND were up 61% on the strength of cloud SSD and enterprise markets. Meanwhile, the Mobile Business Unit (“MBU”) revenue was up 32% on improved DRAM prices and higher memory content for smartphones, slightly offset by declines in average selling prices (“asp”) for Trade NAND.


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