Micron Reports Second-Quarter Earnings That Beat Estimates

(Bloomberg) -- Micron Technology Inc. reported sales and profit that exceeded analysts’ predictions, offering evidence for its assertion that the industry will soon return to growth.

Key Insights

• Profit, excluding certain items, was $1.71 a share in the fiscal second quarter. Revenue fell 21 percent to $5.84 billion in the period ended Feb. 28. Analysts, on average, projected profit of $1.65 a share on sales of $5.83 billion, according to data compiled by Bloomberg.
• That sales decline was the first in more than two years. Owners of large data centers, such as Alphabet Inc.’s Google and Amazon.com Inc.’s AWS, have slashed orders as they worked through stockpiles of unused components.
• Micron makes chips used as the main memory in computers and as storage in mobile devices. Increasing demand from data-center operators and in more diverse uses such as cars, had helped drive demand.
• Chief Executive Officer Sanjay Mehrotra has been telling investors that this much broader set of customers will help insulate the industry from the brutal downturns that have wiped out profitability in the past.

Market Reaction

• Micron’s stock was little changed in extended trading following the announcement, after closing at $40.13 in New York.
• This year shares have rallied more than 26 percent along with other chip stocks as investors accepted industry executive’s reassurances that demand will improve in the second half of the year.

Know More

• Many analysts had cut their predictions for Micron’s earnings and outlook in the run up to its announcement, citing worsening prices for computer memory.
• While Micron is suffering a rapid decline in revenue caused by falling orders and prices, unlike previous downturns, those prices haven’t and won’t fall beneath the cost of production, BMO Capital Markets analyst Ambrish Srivastava wrote.
• To see the statement, click here.

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