Micron Technology Inc., the biggest U.S. maker of memory chips, issued a fiscal fourth-quarter sales forecast that fell short of analysts’ estimates on weaker demand for personal-computer components.
Revenue for the period ending in August will be $3.45 billion to $3.7 billion, the Boise, Idaho-based company said in a presentation posted on its website. Analysts on average were projecting sales of $4.16 billion, according to data compiled by Bloomberg.
For the third quarter, which ended June 4, Micron reported its first revenue decline in more than two years, reflecting sluggish PC sales as computer makers failed to win over consumers with new laptops. Demand for memory chips used in servers, while strong, hasn’t made up for the shortfall, according to Daniel Amir, an analyst at Ladenburg Thalmann & Co.
“PCs are just in a secular decline, period,” said Amir, who has the equivalent of a hold rating on the stock. “Server and network DRAM is doing well but that’s not enough.”
Micron shares fell 12 percent in extended trading following the forecast. The stock was little changed at $24.02 at the close in New York, leaving it down 31 percent this year.
Third-quarter sales fell 3.2 percent to $3.85 billion. Profit excluding certain items was 54 cents a share, Micron said Thursday in a regulatory filing. That compared with the average of analysts’ estimates for revenue of $3.9 billion and profit of 57 cents.
Demand for PC parts was below where it normally is and that alone points to an improvement later in the year when a new operating system from Microsoft Corp. and a new processor design from Intel Corp. may help sales of new computers, Micron said. Pricing and profitability in PC memory will also be helped as suppliers move output to other products, such as memory for mobile phones.
“It was so far below seasonal demand in PCs that we think it’s got to be better and better in a environment where capacity is shifting to other markets,” Micron President Mark Adams said in an interview. “That could help with the recovery.”
Net income in the third quarter fell to $491 million from $806 million a year earlier. While that decline was to a lower level than analysts’ had predicted, the industry hasn’t returned to the past cycles when gluts forced producers to take a loss as prices slumped below costs, Micron said.
Micron is the largest remaining U.S.-based maker of computer memory, also known as dynamic random access memory, or DRAM, chips. The company is expanding its offerings to include memory for smartphones and servers and another type of chips used as storage in mobile devices and computers.