Micron Technology's Remarkable Financial Turnaround

By Bobby Samwell • Saturday, October 05 10:16 • Permanent Link

Micron Technology's 10-K for the year ended August 29, 2024, reveals a significant turnaround in its financial performance compared to the prior year. The company reported total revenue of $25.1 billion, representing a substantial 62% increase from 2023, which was largely driven by a 60% increase in sales of DRAM products and a 72% increase in sales of NAND products. This recovery was attributed to improving industry conditions, including increased demand growth and supply discipline.

The gross margin improved to 22% in 2024, a significant turnaround from the negative 9% in 2023. This improvement was primarily due to increases in average selling prices and manufacturing cost reductions, as well as lower costs from the sale of inventories written down in 2023. In 2023, the company had incurred charges to write down inventories to their net realizable value (NRV), which impacted the gross margin.

Operating income also rebounded, reaching $1.3 billion in 2024 compared to a loss of $5.7 billion in 2023. The company's operating segments showed varying performances, with the Compute and Networking Business Unit (CNBU) and Mobile Business Unit (MBU) reporting improvements in operating income, while the Embedded Business Unit (EBU) experienced a decrease. The Storage Business Unit (SBU) also showed an improvement in operating income.

In terms of expenses, research and development (R&D) expenses increased by 10% in 2024 compared to 2023, primarily due to higher employee compensation and increased volumes of development and prequalification wafers. Selling, general, and administrative (SG&A) expenses also increased by 23% in 2024 compared to 2023, driven by higher employee compensation.

The company's effective tax rate for 2024 was 36.4%, a significant increase from the negative 3.1% in 2023, primarily due to changes in profitability. The company also provided insights into potential impacts from various tax reforms and the OECD's base erosion and profit shifting project.

The market has reacted to these announcements by moving the company's shares 0.4% to a price of $102.25. For more information, read the company's full 10-K submission here.

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