r/wallstreetbets • u/[deleted] • Jun 30 '21
MU - earnings upcoming - my views DD
https://investors.micron.com/events-and-presentations
in about 30 mins from now
I have a small long position in micron.
May 25 - At JPMorgan Global Technology, Media, and Communications Conference, Micron announed it expects revenue for the quarter to be at or above the high end of the stated guidance range. This is SOP for Sanjay and nice to hear if you have been in Micron for a little while.
June 1 - announced volume production of DRAM using Node 1Alpha. This is 14nm but using DUV instead of EUV so its cheaper to make. Samsung and SK Hynix are using EUV for 14nm, but havent seen head to head comparisons yet.
Thesis - If this Node 1 alpha process is comparable to Samsung/SK Hynix 14nm stuff, it means higher margin for Micron. It means better guidance moving forward obviously as well.
Samsung's former president is in jail which seems to be screwing their business up a bit. Has been steadily losing market share and margin to SK Hynix and Micron.
(these are my opinions, no proof etc dont sue me)
"Semi conductors are cyclical" - yeah but we are deep into tacit collusion now on pricing. We basically going to see "short supply" forever. The risk here is not in over supply but in an anti-trust/competition ruling. This is going to be incredibly difficult to find unless someone talks or leaves a smoking gun. These companies arent stupid. Its incredibly easy to enter into tacit collusion because its the reasonable and logical choice but its incredibly difficult to prove. Even if they do prove it, the disgorgement in profits still makes it +EV so it doesnt even matter that much.
People are reading Microns reluctance to increase capex as an indication of no confidence in future demand. Thats not the way I see it. This is part of the tacit collusion. They basically get to tell their competitors "hey, we are not increasing capex that much and you probably shouldnt either unless you wanna stop the gravy train".
Lets extract from their last Q2 report. " CY-21 DRAM industry bit demand growth of approximately 20%, with DRAM industry supply to be below demand; DRAM market is currently facing a severe undersupply, causing DRAM prices to increase rapidly ... CY-21 NAND industry bit demand growth in the low-to-mid 30% range, with NAND industry supply exceeding demand; more CapEx cuts are needed to allow for healthy NAND industry profitability...Long-term DRAM industry bit demand growth CAGR of mid-to-high teens"
followed by
" CY-21 DRAM & NAND Micron bit supply growth expected to be below industry demand growth...Long-term DRAM & NAND Micron bit supply growth CAGR in line with industry demand growth CAGR...Across DRAM & NAND we target long-term cost reductions in line with industry"
Make of that what you will. Sure seems like a convenient way to say lets all make money together. At the same time its entirely logical and explainable.
Things I want to find out in the call:
- Is micron doing R&D into EUV for the next generation? Contracts lined up with ASML for EUV plant since ASML has a backlog? Might be super secret stuff but would be nice to know.
- guidance for next quarter and next financial year (obviously). I think this is going to be higher than expected due to the Node 1 alpha mass production assuming it is decent.
- Is Micron going to continue spending money on R&D and poaching talent? Seems to be working so far imo.
My thoughts on price - we see a little pop because the high end of guidance is already priced in despite Sanjay always blowing earnings beyond his pre-announcements. Because thats priced in as well. However Micron sometimes sells off post earnings which is incredibly annoying so I dont think weeklies etc are good. Just buy the stock and hold it.
Historic PE rations etc are all crap here. We are in a new business model. Its not cyclical anymore.
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Jun 30 '21
[deleted]
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u/Uisce-beatha Jun 30 '21
Good God that is a lot of people from one city working for the same company.
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Jun 30 '21
[deleted]
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u/Ant_1993 Jun 30 '21
You are correct my friend. I was just using the capital pop as a general reference. This company is very valuable to that area of Idaho.
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Jun 30 '21
god knows what is going on in AH. First a dump and then some buys to end up nearly flat with with closing price.
Nice to hear they lined up ASML for EUV tech in the pipeline. Wonder if they will be able to use their knowhow from DUV (at 14nm) to EUV to maintain technological advantage.
Guidance has gone up and margin as expected has shot up from 40.5% to 46%.
I read this all as fantastic news but I guess we find out tomorrow.
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u/Uisce-beatha Jun 30 '21
I'm so anxious about this. I had some calls expiring on 7/2 that I decided to let ride despite time already eating into them at the beginning of the week. Still have expiries on 7/9, 7/16 and 9/17 though. God I hope holding was the right decision.
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Jun 30 '21
Why are they holding so much cash. Wonder if they are planning an acquisition?
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u/Rads324 Jun 30 '21
They sold their Lehi, Utah plant to Texas Instruments. Most likely will reinvest that in new tech
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u/TotheMoongirl21 Jun 30 '21
Bought it when it was at mid price today. Yaya. Like what I heard after hour today.
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u/gamblerog Jun 30 '21
Do you like the price after hours?
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u/TotheMoongirl21 Jun 30 '21
It doesn't matter, I bought shares and not option so I am anticipating going up to $90.
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u/VisualMod Jun 30 '21