Micron closed down 4.8% on Thursday after CFO Dave Zinsner said during a Q&A session with KeyBanc Capital that Micron now thinks its November quarter (fiscal first quarter) revenue will be below an informal guidance range of $5.4 billion to $5.6 billion. The guidance range was roughly based on Micron's May quarter revenue ($5.44 billion) and what the company's August quarter guidance would be around if the quarter didn't have an extra week.
It's worth noting here that many analyst estimates for Micron's November quarter were -- after the company delivered better-than-expected results and guidance in June -- above its preliminary guidance range. Going into Thursday, the FactSet revenue consensus for the quarter stood at $5.75 billion.
Also: While Micron is reiterating August quarter revenue guidance of $5.75 billion to $6.25 billion, Zinsner says the quarter is now looking "more back-end loaded" than originally expected. Among the reasons given for this: Uncertainty among customers regarding their memory needs; more product qualifications than usual happening towards the end of the quarter; and supply constraints related to the fact that some end-markets have been stronger than expected (while others have been weaker than expected).
Interestingly, Zinser said that while demand from cloud server clients "continues to be healthy," second-half sales to them will probably be below first-half sales, which were up strongly as COVID-19 helped pull forward demand. Those comments follow remarks from Western Digital about how cloud service providers are "going into a digestion phase," as well as ones from DRAM and NAND rival Samsung about inventories being high among server memory buyers.
Zinser also said that enterprise server demand is "clearly weak." That remark isn't too surprising, given recent guidance and commentary from the likes of Cisco Systems (CSCO) , Intel (INTC) and Seagate (STX) .
Regarding mobile memory demand, Zinsner was upbeat about strong 5G phone shipment growth -- also a boon for the likes of Qualcomm (QCOM) , Skyworks (SWKS) and Qorvo (QRVO) -- and its positive impact on smartphone DRAM content, particularly within lower price tiers. But he did caution that Chinese phone OEMs have inventory to work through, after stockpiling inventories in recent quarters.
On the whole, Zinsner's November quarter commentary wasn't a total shock, in light of what some peers and customers have shared over the last few weeks. And though a lot could depend on how macro conditions trend, it's worth noting that Zinsner reiterated Micron remains upbeat about 2021 cloud and mobile memory demand.
But at a time when The Philadelphia Semiconductor Index is up 19% on the year, and companies like AMD (AMD) and Nvidia (NVDA) are up far more than that, the remarks are another sign that some chip end-markets appear to be softening a little right now.