Although far from the levels reached during the speculative euphoria that gripped the semiconductor sector during the pandemic, the stock market valuation of the DRAM and NAND memory chip specialist, in oligopoly with Samsung and SK Hynix, has made good progress in recent weeks.
Last September, we were already surprised that investors were so lenient towards Micron. In the space of barely twelve months, the group had seen its sales halve and its business suddenly generate abysmal losses; from an operating profit of $9.7 billion, it had moved on to a dry loss of $5.7 billion.
Notwithstanding a well-crafted press release and the inevitable headline-grabbing clichés about artificial intelligence, the figures for the fiscal quarter just ended still give cause for concern: although sales - which are decidedly subject to wide swings - rose by 18%, the operating loss reached $1.1 billion.
This is the fifth consecutive loss-making quarter for Micron, which has never experienced such a sequence in the last decade. Optimists will point out, however, that there is still room for improvement, since the said operating loss reached $1.4 billion in the previous quarter; and that in an industry with long cycles, you have to give it time.
Last September, we mentioned our concern about the finished goods inventories piling up on the balance sheet. Clearly ready to sell them off, Micron took a $605 million write-down on their book value this quarter; over the full year 2023, this brings inventory write-downs to a total of $1.8 billion.
This doesn't stop management from boasting about supposed "pricing" in the header of its press release. Further down in the document, the figures come out that don't lie, with negative cash generation for the quarter as investments consume more than operating cash flow.