Micron (MU) is scheduled to report results of its fiscal first quarter after the market close on December 18, with a conference call scheduled for 4:30 pm ET. What to watch for:
1. GUIDANCE: Along with its last report, Micron guided for Q1 earnings per share of $2.95, plus or minus 7c, on revenue of $7.9B-$8.3B. At the time, analysts were expecting the company to report EPS of $3.06 on revenue of $8.44B. In late November, however, Micron CEO Sanjay Mehrotra said in a webcast presentation that the company expects its adjusted EPS for Q1 to be "somewhat above" the guidance midpoint of $2.95 but sees revenue for the quarter to be near the low-end of its previously announce range. Analysts currently expect Micron to report Q1 EPS of $2.96 on revenue of $8.02B.
2. MKM CUTS FY19 EPS VIEW: Last week, MKM Partners analyst Ruben Roy said in a research note to investors that he maintained his Buy rating and $50 price target on Micron but lowered his fiscal 2019 EPS view to $10.10 from $11.11 ahead of the company's earnings report. The analyst said he believes that the "complexities related to DRAM scaling coupled with likely capital expenditure cuts will limit bit growth over the next few years", pressuring next year's growth rate below 20%. Roy added that a more conservative approach to his DRAM average selling price assumptions is warranted when considering deteriorating demand trends into year-end.
3. TRADE SECRETS: In early November, a federal grand jury indicted a state-owned enterprise of the People's Republic of China, a Taiwan company, and three individuals, charging them with crimes related to a conspiracy to steal, convey, and possess stolen trade secrets of Micron. All of the defendants are charged with a conspiracy to commit economic espionage, among other crimes. In addition, the United States filed a civil lawsuit seeking to enjoin the further transfer of the stolen trade secrets and to enjoin certain defendants from exporting to the United States any products manufactured by UMC (UMC) or Jinhua that were created using the trade secrets at issue.
4. IM FLASH JV: On October 18, Micron announced that its plans to exercise its right to call Intel's (INTC) interest in the parties joint venture IM Flash Technologies. Micron can exercise the call option starting January 1, 2019, the company said at the time. The chipmaker said at the time that it anticipates no meaningful impact to overall financial results or changes to its fiscal 2019 capital expenditures and long-term capital expenditure target. At the time of close, Micron expects to pay approximately $1.5B in cash for the transaction, dissolving Intel's non-controlling interest in IM Flash as well as IM Flash member debt, which was approximately $1B as of August 30, 2018, the company said.
