Author: PATRICK SEITZ
Source
Memory-chip maker Micron Technology (MU) late Tuesday missed Wall Street’s low expectations for its fiscal second quarter as it struggles through a cyclical industry downturn in demand. However, MU stock rose in extended trading on comments that the worst might be over for Micron.
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The Boise, Idaho-based company lost an adjusted $1.91 a share on sales of $3.69 billion for the quarter ended March 2. Analysts polled by FactSet had expected Micron to lose 67 cents a share on sales of $3.71 billion. In the year-earlier period, Micron earned $2.14 a share on sales of $7.79 billion.
Micron took a charge of $1.43 billion for inventory write-downs in the second quarter. That had a negative impact on earnings of $1.34 a share.
For the current quarter, Micron predicted an adjusted loss of $1.58 a share on revenue of $3.7 billion. Wall Street was projecting a loss of 96 cents a share on sales of $3.72 billion for the fiscal third quarter. In the year-earlier period, Micron earned $2.59 a share on sales of $8.64 billion.
Micron’s guidance includes an inventory write-down of about $500 million. That will negatively impact earnings by about 45 cents a share.
MU Stock Rises On Outlook
In after-hours trading on the stock market today, MU stock rose 1.5% to 60.15. During the regular session Tuesday, MU stock slid 0.9% to close at 59.28.
In written comments, Micron Chief Executive Sanjay Mehrotra said he sees a “gradually improving supply-demand balance in the months ahead.” Customer inventories have reduced in several end markets, including data centers, he said.
However, the memory-chip segment still faces “significant near-term challenges,” Mehrotra said.
“The semiconductor memory and storage industry is facing its worst downturn in the last 13 years, with an exceptionally weak pricing environment that is significantly impacting our financial performance,” he said.
But the long-term outlook is bright, with investments in artificial intelligence providing another driver of demand for memory chips, Mehrotra said.
MU Stock Has Subpar Composite Rating
Micron makes two main types of memory chips: DRAM and Nand. DRAM chips act as the main memory in PCs, servers and other devices, working closely with central processing units. Nand flash provides longer-term data storage.
Dynamic random-access memory, or DRAM, accounted for 74% of Micron’s revenue in its fiscal second quarter. Nand flash memory accounted for 24% of its revenue during the period.
MU stock ranks third out of 10 stocks in IBD’s Computer-Data Storage industry group, according to IBD Stock Checkup. But it has a subpar IBD Composite Rating of 45 out of 99.
IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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