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GuruFocus has detected 6 Warning Signs with Micron Technology Inc $MU.
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Micron Technology Inc (NAS:MU)
Gross Profit
$3,792 Mil (TTM As of Feb. 2017)

Micron Technology Inc's gross profit for the three months ended in Feb. 2017 was $1,704 Mil. Micron Technology Inc's gross profit for the trailing twelve months (TTM) ended in Feb. 2017 was $3,792 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Micron Technology Inc's gross profit for the three months ended in Feb. 2017 was $1,704 Mil. Micron Technology Inc's revenue for the three months ended in Feb. 2017 was $4,648 Mil. Therefore, Micron Technology Inc's Gross Margin for the quarter that ended in Feb. 2017 was 36.66%.

Micron Technology Inc had a gross margin of 36.66% for the quarter that ended in Feb. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Micron Technology Inc was 33.24%. The lowest was -9.16%. And the median was 20.10%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Micron Technology Inc's Gross Profit for the fiscal year that ended in Aug. 2016 is calculated as

Gross Profit (A: Aug. 2016 )=Revenue - Cost of Goods Sold
=12399 - 9894
=2,505

Micron Technology Inc's Gross Profit for the quarter that ended in Feb. 2017 is calculated as

Gross Profit (Q: Feb. 2017 )=Revenue - Cost of Goods Sold
=4648 - 2944
=1,704

Micron Technology Inc Gross Profit for the trailing twelve months (TTM) ended in Feb. 2017 was 498 (May. 2016 ) + 579 (Aug. 2016 ) + 1011 (Nov. 2016 ) + 1704 (Feb. 2017 ) = $3,792 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Micron Technology Inc's Gross Margin for the quarter that ended in Feb. 2017 is calculated as

Gross Margin (Q: Feb. 2017 )=Gross Profit (Q: Feb. 2017 ) / Revenue (Q: Feb. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,704 / 4648
=36.66 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Micron Technology Inc had a gross margin of 36.66% for the quarter that ended in Feb. 2017 => Competition eroding margins


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Micron Technology Inc Annual Data

Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14Aug15Aug16
Gross_Profit 1,078-55-4402,7141,7589681,8475,4375,2152,505

Micron Technology Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
Gross_Profit 1,6381,4051,2029708495794985791,0111,704
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