Micron Technology CEO Discusses F1Q2011 Results – Earnings Call Transcript

Micron Technology CEO Discusses F1Q2011 Results â¿¿ Earnings Call Transcript
By Seeking Alpha ,

Micron Technology Inc. (MU)

F1Q2011 Earnings Call Transcript

December 22, 2010 4:30 pm ET

Executives

Kipp Bedard – VP, IR

Steve Appleton – Chairman and CEO

Ron Foster – CFO and VP, Finance

Mark Durcan – President and COO

Analysts

Shawn Webster – Macquarie

Daniel Berenbaum – Auriga USA

Glen Yeung – Citigroup

Doug Freedman – Gleacher & Company

Uche Orji – UBS

Tim Luke – Barclays Capital

Kate Kotlarsky – Goldman Sachs

John Pitzer – Credit Suisse

Atif Malik – Morgan Stanley

Presentation

Operator

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Good afternoon. My name is Hewitt and I'll be your conference facilitator today. At this time I'd like to welcome everyone to Micron Technology's first quarter 2011 financial release conference call. All lines have been placed on-mute to prevent any background noise. After the remarks, there will be a question-and-answer period. Thank you.

It is now my pleasure to turn the floor over to our host, Kipp Bedard. Sir, you may begin your conference.

Kipp Bedard

Thank you very much. Welcome everybody to Micron Technology's first quarter 2011 financial release conference call. On the call today is Steve Appleton, Chairman and CEO; Mark Durcan, President and Chief Operating Officer; and Mr. Ron Foster, Chief Financial Officer and Vice President of Finance; and also with us today is, Mark Adams, Vice President of Worldwide Sales.

This conference call, including audio and slides, is also available on Micron's website at micron.com. If you have not had an opportunity to review the first quarter financial press release, it is also available on our website at micron.com. Our call will be approximately 60 minutes in length. There will be an audio replay of this call, accessed by dialing 706-645-9291, with the confirmation code of 32359725. This replay will run through Wednesday December 29, 2010, at 5:30 pm Mountain Time. A webcast replay will be available on the Company's website until December, 29, 2011.

We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the Company, including information on the various financial conferences that we will be attending. Please note the following Safe Harbor statement.

During the course of this meeting, we may make projections or other forward-looking statements regarding future events or the future financial performance of the Company and the industry. We wish to caution you that such statements are predictions, and that actual events or results may differ materially. We refer you to the documents the Company files on a consolidated basis from time-to-time with the Securities and Exchange Commission, specifically the Company's most recent Form 10-K and Form 10-Q.

These documents contain and identify important factors that could cause the actual results for the Company on a consolidated basis to differ materially from those contained in our projections or forward-looking statements. These certain factors can be found in the Investor Relations section of Micron's website. Although, we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of the presentation to conform these statements to actual results.

Now I'd like to turn the call over to Steve Appleton. Steve?

Steve Appleton

Thanks, Kipp. I'm going to make some opening comments and I will turn it over to Ron for some commentary on the financials and then we will open up for Q&A for any of us here participating on the call today.

I will start out with some of the activity we had in our fiscal Q1. In the operations and technology side, we had a number of achievements worth noting. First of all, our NAND 25-nanometer transition is actually going quite well and I think we would characterize it as being ahead of schedule, so that now a majority of our NAND bits are now shipping with Micron's 25 nanometer advanced process.

In addition to that, Inotera is now 100% on Micron's stack technology and they are now just getting back up to starting at full capacity. So, we think that we're well on our way to improving both volume and yield there.

Clearly as we noted before, there were some difficulties previously, but they are on a pretty good trajectory right now. So, as you listen to what our commentary about it, similar commentary about it, I think they feel like they are on a pretty good path moving forward.

In addition to that, IMFS started its first waivers and that's utilizing our advanced 25 nanometer process as well. So, we're pretty excited about that. I would note though that we all think there's going to be significant output out of the facility until the middle of next year. Obviously, there will be a start [ph] and qualification ramp phase before then, but we are pretty excited that we are underway there.

Switching over and trying to talk about the markets a little bit. In the DRAM market last earnings call, I noted that we have started to see some softening in the PC space for DRAM and that weakness has continued even though it's primarily due with the DDR3 product. In fact, I noticed the Hynix CEO comment a few days ago, acknowledging that this environment is going to have an impact on their current quarter.

Clearly, it's had an impact on our current quarter, but I guess what I will emphasize is, I don't think this is the winter of 2007 or 2008 and you might ask why that's the case? First of all, I really do think that what we are experiencing right now is a demand driven weakness as opposed to a supply side driven weakness. What I mean by that is we had such a sharp turn, I guess starting about a year ago, a year and half ago and that was driven by the damage that had been done in the DRAM industry and as a result those of us that were still around here who are going to produce were a beneficiary of that.

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