Micron Technology Inc. shares rose in the extended session Tuesday after the memory-chip maker’s results topped lowered expectations for the quarter and executives forecast improvement in the fourth quarter even though actual numbers were shy of Wall Street expectations.
Micron MU, -1.54% shares, which had been up 5% when the call started, were last up 10% after hours following the company’s outlook. Shares declined 1.5% to close the regular session at $32.68. In comparison, the S&P 500 index SPX, -0.95% finished down 1%, while the Nasdaq Composite Index COMP, -1.51% and the PHLX Semiconductor Index SOX, -1.48% both declined 1.5%.
On the conference call, Micron Chief Executive Sanjay Mehrotra said he expects “strong sequential growth” in the fourth quarter as inventory problems improve.
“This reinforces our confidence that good demand for DRAM will return to healthy year-over-year growth in the second half of calendar 2019,” Mehrotra said. “NAND bit demand is also increasing in most markets as elasticity kicks in response to price declines over the last year.”
DRAM, or dynamic random access memory, is the type of memory commonly used in PCs and servers, while NAND chips are the flash memory chips used in USB drives and smaller devices such as digital cameras.
“Both the DRAM and NAND markets remain oversupplied,” said Chief Financial Officer David Zinsner on the call. “Having said that, we are starting to see some signs of bit-demand improvement. As Sanjay mentioned, we expect strong growth in our DRAM bit shipments for the cloud graphics and PC markets in fiscal fourth quarter, followed by more normal bit growth in fiscal first quarter.”
While Mehrotra and Zinsner expressed optimism, bottom-line and top-line forecasts paled in comparison to Wall Street expectations.
Zinsner forecast adjusted fourth-quarter earnings of 38 cents to 52 cents a share on revenue of $4.2 billion to $4.7 billion. Analysts polled by FactSet had estimated 58 cents a share on revenue of $4.56 billion.
The company reported fiscal third-quarter net income of $840 million, or 74 cents a share, compared with $3.82 billion, or $3.10 a share, in the year-ago period.
Adjusted earnings were $1.05 a share. Revenue fell to $4.79 billion from $7.8 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of 79 cents a share on revenue of $4.67 billion.
At the beginning of the third quarter, the Street had been estimating $1.36 a share on revenue of $5.59 billion.
Micron also said it planned to reduce capital expenditures in fiscal 2020 “to help improve industry supply-demand balance.”
Add Comment