Micron Hammered by Weak Guidance; Tesla Discloses Autopilot Probe; Apple Reportedly Eyes Tidal
Here's a look at Friday's tech stories:
Micron tumbles after posting mixed results and issuing soft guidance
Though Micron (MU) - Get Report beat its May quarter consensus earnings estimate by a penny and missed revenue estimates by a moderate $60 million, the company guided in its earnings slides for August quarter revenue of $2.9 billion to $3.2 billion and EPS of -$0.16 to -$0.24, almost entirely below consensus estimates of $3.2 billion and $0.04.
Also announced: Micron is launching layoffs that are expected to yield over $300 million in cost savings in fiscal 2017, which ends in August. With sales down 25% annually in the May quarter and August quarter guidance implying a 15% drop at the midpoint, it's not hard to see why Micron is hungry to cut costs.
Weak NAND flash memory sales were the main culprit for the May quarter sales weakness: Non-volatile memory bit shipments fell 10% sequentially and average sales price fell 6%. On the other hand, DRAM sales -- though still pressured by a rough PC market -- rebounded some from a weak February quarter. Bit shipments rose 22% sequentially, more than offsetting an 11% drop in average sales price. Non-volatile memory was 31% of total revenue, and DRAM 60%.
While weak smartphone demand is also undoubtedly a factor, Micron's NAND figures suggest the company could be facing competitive pressures from larger rival Samsung, which has been ahead of peers in ramping production of 3D NAND flash -- it's denser and cheaper than older NAND technologies. Micron launched its first 3D NAND SSDs -- they rely on technology developed with Intel (INTC) - Get Report -- in late May.
Somewhat high expectations could be hurting Micron: Though still far below its late-2014 and early-2015 highs, shared were up 47% from a May low of $9.35 going into earnings thanks to growing hopes the memory industry was finally bottoming after a very rough 12-month stretch.
Those hopes may have been a little premature. Things could look better in a few months, as the iPhone 7 provides a sales lift, Micron's 3D NAND shipments ramp, and lower DRAM industry capital spending slows down average sales price declines.
Tesla discloses an NHTSA probe of its Autopilot feature's performance during a fatal crash
Tesla (TSLA) - Get Reportsold off in after-hours trading on news of the crash, as did Autopilot vision processor supplier Mobileye (MBLY) , which had soared in regular trading on a report it would soon announce a self-driving car partnership with BMW and Intel.
While stating the fatality was the first known one in more than 130 million miles of Autopilot use, Tesla also said both Autopilot and the driver of a Model S failed to detect the white side of a tractor trailer "against a brightly lit sky" as the trailer drove across a divided highway perpendicular to the Model S.
Tesla reiterates it disables Autopilot by default, and requires users to both acknowledge the technology is still in beta and that drivers should keep their hands on the wheel while using it.
Given the number of miles logged by Autopilot and other autonomous driving solutions, it may have only been a matter of time before a probe related to an incident occurred. Nonetheless, with the public still very jittery about self-driving cars, Tesla is bound to take a PR hit, particularly given the details of the case.
Tesla itself cautioned a few months ago there's a big difference between a self-driving system that can occasionally take over from drivers, and one that can fully do so.
"[G]etting a machine learning system to be 99% correct is relatively easy, but getting it to be 99.9999% correct, which is where it ultimately needs to be, is vastly more difficult."
That's worth remembering as Google, Baidu, BMW and others attempt to bring self-driving cars to market over the next several years.
Apple is reportedly in "exploratory talks" to acquire Jay-Z's Tidal music streaming service
In a report that raised more than a few eyebrows, The Wall Street Journal states Apple (AAPL) - Get Report is in early-stage talks to acquire Tidal, a streaming service run by Jay-Z.
It adds Apple's interest stems from Tidal's strong ties to various popular artists -- some of those artists have provided exclusive material to Tidal and/or have been granted equity stakes.
Apple, of course, bought Beats -- and with it, the Beats Music service -- service for $3 billion in 2014. Beats Music provided the groundwork for Apple Music, which launched in mid-2015 and now has over 15 million subscribers, second only to Spotfiy's 30 million-plus. Tidal had 4.2 million subscribers as of May.
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It's likely Apple would fold Tidal into Apple Music in the event of an acquisition. However, with the
WSJ
calling buyout talks exploratory and mentioning Tidal has held talks with other suitors, and with Apple bound to face challenges in integrating Tidal without losing a chunk of the service's subscriber base, it's quite possible nothing ultimately comes of the talks.