Micron Technology shares tumbled Thursday after the memory-chip maker missed estimates for its fiscal first quarter amid a cyclical downturn. Also, its outlook for the current quarter was worse than expected. MU stock dropped near a two-year low on the news.
The Boise, Idaho-based company late Wednesday said it lost an adjusted 4 cents a share on sales of $4.09 billion in the quarter ended Dec. 1. Analysts polled by FactSet had expected Micron to lose 2 cents a share on sales of $4.13 billion. In the year-earlier period, Micron earned $2.16 a share on sales of $7.69 billion.
For the current quarter, Micron predicted an adjusted loss of 62 cents a share on sales of $3.8 billion. Wall Street was expecting for a loss of 32 cents a share on sales of $3.92 billion in Micron's fiscal second quarter. In the year-earlier period, Micron earned $2.14 a share on sales of $7.79 billion.
On Nov. 16, Micron disclosed that it was slashing production of memory chips, citing weak demand. It also announced plans to cut capital expenditures.
MU Stock Sinks After Report
On the stock market today, MU stock fell 3.4% to close at 49.43. During the regular session Wednesday, MU stock rose 1% to finish at 51.19.
"Micron delivered fiscal first-quarter revenue and (per-share earnings) within guidance ranges despite challenging conditions during the quarter," Chief Executive Sanjay Mehrotra said in a news release. "Micron's strong technology, manufacturing and financial position put us on solid footing to navigate the near-term environment, and we are taking decisive actions to cut our supply and expenses."
He added, "We expect improving customer inventories to enable higher revenue in the fiscal second half, and to deliver strong profitability once we get past this downturn."
Micron said it will reduce its workforce by about 10% in 2023 as it deals with a glut of memory chips on the market. Micron had about 48,000 employees worldwide as of Sept. 1.
Worst Memory-Chip Downturn In 13 Years
Micron is likely to face challenging conditions through calendar 2023, Morgan Stanley analyst Joseph Moore said in a note to clients.
"While bulls seem to forecast improvement in the next couple of quarters, we don't see it that way," Moore said. He rates MU stock as underweight, or sell, with a price target of 46.
Evercore ISI analyst C.J. Muse remains optimistic about Micron's prospects next year. He kept his outperform rating and price target of 65.
"We are in the worst memory downturn in 13 years and a recovery will simply take time," Muse said in a report.
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 67% of Micron's revenue in its fiscal first quarter. Nand flash memory accounted for 27% of its revenue during the period.
MU stock hit its all-time high of 98.45 on Jan. 5.
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