Micron ‘delivered an exceptional quarter,’ says CEO Sanjay Mehrotra

DEALDASH.COM FOR $50 OF FREE CREDIT AND YOU'RE FIRST WIN GUARANTEED. GUARANTEED. >> STOCK OF MICRON. PROBABLY THE STOCK OF THE DAY. IT DELIVERED ANOTHER EARNINGS BEAT IN ISSUING STRONG GUIDANCE. PROBABLY WONDERING WHY STOCKS LOOKING DOWN. MAYBE THAT'S WRONG. WE'VE GOT DATA CENTER REVENUE JUMPING 11 FOLD. BUT THAT'S NOT REALLY THE STORY. WE'RE GOING TO FIND OUT WHAT WENT WRONG LAST NIGHT BECAUSE IT'S PROBABLY, I THINK, A BIG MISTAKE TO THINK IT WAS WRONG. JOINING US NOW ON A CNBC EXCLUSIVE IS MICRON CHAIRMAN AND CEO SANJAY MEHROTRA. I'M GOING TO SAY CONGRATULATIONS SANJAY. AND THANK YOU FOR COMING ON THE SHOW. FIRST OF ALL. >> THANK YOU, JIM, AND REALLY GREAT TO BE BACK ON YOUR SHOW AGAIN. >> OH THANK YOU. NOW, WHAT I WANT TO GET AT IS THE GROSS MARGINS WERE EXTRAORDINARY HERE. AND ANYONE WHO'S FOLLOWED YOUR COMPANY FOR MANY YEARS KNOWS THAT THESE ARE. I MEAN, ANDY GROVE, WHO WAS MAYBE THE GREATEST SEMICONDUCTOR EXECUTIVE OF ALL TIME, WOULD HAVE SAID, THIS IS IMPOSSIBLE. YOUR NUMBERS ARE IMPOSSIBLE. BUT THE STREETS SEEM TO BE UNSATISFIED WHEN THE MORE I DIG INTO IT, I KNOW EVEN SINCE 94, THE ONLY TIME YOU'VE HAD SHORTFALL IS WHEN TOO MANY COMPANIES STARTED PUTTING OUT CHIPS. THIS WAS NOT A SHORTFALL. THIS WAS YOUR DECISION TO GIVE EMPLOYEES MORE MONEY. IT'S LITERALLY A BIT OF A PROFIT SHARE. CAN YOU EXPLAIN TO PEOPLE THE DIFFERENCE BETWEEN GETTING SO-CALLED HURT IN EARNINGS, BECAUSE YOU DECIDED TO PAY PEOPLE A LITTLE MORE, VERSUS A FLOOD OF NEW CHIPS? THAT TENDS TO DESTROY GROSS MARGIN AND PROFITABILITY? >> JIM, WE DELIVERED AN EXCEPTIONAL QUARTER, EXCEPTIONAL YEAR WITH $133 BILLION IN REVENUE, MORE THAN 250% UP YEAR OVER YEAR, WITH 87% GROSS MARGINS IN Q4. AND WE GUIDED TO 86.25% GROSS MARGIN, APPROXIMATELY THAT FOR OUR Q ONE THE CURRENT QUARTER. SO REALLY, MICRON TEAM DELIVERED AN EXCEPTIONAL QUARTER. AND OF COURSE, YOU KNOW, A COMMENSURATE WITH OUR RECORD QUARTER. WE REWARDED OUR TEAM MEMBERS IN RECORD FASHION AS WELL WITH THEIR INCENTIVE COMPENSATION THAT IMPACTED THE OPEX IN OUR FISCAL FOURTH QUARTER. BUT AS THE MANUFACTURING WORKERS INCENTIVE COMPENSATION IN FISCAL FOURTH QUARTER CARRIES INTO THE FIRST QUARTER. COST OF GOODS SOLD. IT DOES IMPACT OUR GROSS MARGIN, BUT WE GUIDE IT TO A VERY STRONG GROSS MARGIN OF 86.25%. VERY PLEASED AND PROUD TO BE ABLE TO INCENTIVIZE OUR TEAM MEMBERS IN LINE WITH OUR RECORD PERFORMANCE. IT'S IMPORTANT FOR US TO BE COMPETITIVE. IT IS IMPORTANT FOR US TO ATTRACT, RETAIN AND MOTIVATE OUR TALENT SO THAT OUR MOMENTUM CONTINUES HERE. JIM, MEMORY IS KEY IN THIS ERA OF AI OR SUPERINTELLIGENCE. THIS MEMORY IS WHAT ENABLES INTELLIGENCE. IT ENHANCES INTELLIGENCE, AND MICRON HAS A COMPREHENSIVE PORTFOLIO OF TECHNOLOGY PRODUCTS, MANUFACTURING CAPABILITIES, AND WE ARE CONTINUING TO ADDRESS THE FAST GROWING OPPORTUNITIES AHEAD. >> ALL RIGHT. SO, SANJAY, I VISITED YOU IN AUGUST 20TH IN BOISE. YOU HAD 26 STRATEGIC CUSTOMER AGREEMENTS. YOU SINCE HAVE YOU. YOU HAD 16 YOU JUST CAME UP WITH. 26. HOW DID YOU GET TEN NEW ONES SINCE AUGUST 20TH? >> JIM. NOT ONLY DO WE HAVE MORE CUSTOMERS AND CUSTOMERS WANTING TO DO LONG TERM SUPPLY AGREEMENTS WITH US, BUT CUSTOMERS ARE ALSO EVEN THE CUSTOMERS WHERE WE HAVE ALREADY STRATEGIC CUSTOMER AGREEMENTS IN PLACE, THEY ARE BRINGING UPSIDES TO US FOR DEMAND. IN FACT, WE CANNOT FULFILL THE DEMAND OF OUR CUSTOMERS. CUSTOMERS ARE EXTENDING THESE AGREEMENTS EVEN NOW INTO 2031 TIME FRAME. WE DID EXTENSIONS AS WELL AS WE DID NEW AGREEMENTS GOING INTO THE 2031 TIME FRAME. THIS GIVES US TREMENDOUS VISIBILITY, CERTAINTY OF DEMAND, AND THAT HELPS US PLAN OUR INVESTMENTS IN MANUFACTURING CAPACITY WITH CONFIDENCE. AND OF COURSE, IT PROVIDES THE BENEFIT OF SUPPLY ASSURANCE TO OUR CUSTOMERS AND THEIR ABILITY TO GROW THEIR BUSINESS WITH CONFIDENCE AS WELL. SO THIS JUST REFLECTS THE IMPORTANCE OF MEMORY IN THE AI ERA. MEMORY IS ABSOLUTELY CRITICAL TO BE ABLE TO SCALE UP AI TO PROVIDE VALUE TO THE END USERS, AND OF COURSE, PROVIDE A STRONG