Micron Third-Quarter Forecast Misses Estimates on PC Slumpby
Reports loss in second quarter for first time since 2013
Investors had hoped efforts at consolidation would help glut
Micron Technology Inc., the U.S.’s largest maker of memory chips, gave a fiscal third-quarter forecast that missed analysts’ estimates due to weaker demand for personal computer components.
Revenue in the current period ending in May will be $2.8 billion to $3.1 billion, the company said in a statement Wednesday. That will result in an adjusted loss of 5 cents a share to 12 cents a share, Micron said and compares with average analysts’ estimates of a profit of 3 cents on sales of $3.18 billion.
Micron reported a loss in the second fiscal quarter Wednesday, the first since 2013 as the continuing slump in demand for laptops forces down memory chip prices. That’s disappointing for investors that had hoped the company’s efforts to consolidate the industry by buying up weaker or failing competitors would eliminate the worst of periodic supply gluts that have caused wide swings in its earnings.
Micron shares rose 1.3 percent in extended trading as the company reported it was able to cut the costs of production of NAND flash memory chips by 12 percent in the second quarter. That’s more than some investors had expected, according to Ian Ing, an analyst for MKM Partners Inc. That cost reduction compared with a 15 percent decline in prices in the quarter.
Micron’s second-quarter loss excluding some items was $48 million, or 5 cents a share, compared with profit of $249 million or 24 cents a share, a year earlier. Analysts estimated a loss of of 9 cents. Revenue was $2.93 billion, compared with average analysts’ estimates of $3.05 billion.
The Boise, Idaho-based company is the last U.S. major manufacturer of DRAM, or dynamic random access memory, which is the main memory in computers and smartphones. It competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc. Together, the three companies control more than 90 percent of the market after years of losses forced other suppliers out of the business.
Micron also makes NAND flash memory chips, used as storage in mobile devices and increasingly computers. Analysts say Micron has fallen behind its Korean rivals in the introduction of new production techniques in this area, hurting its profitability.
Micron’s management have been trying to reduce its dependence on commodity chips and move into more profitable areas like memory for servers and other specialist devices. It’s also making solid-state drives, replacements for hard disk drives made of chips, as a more profitable outlet for its products.