Micron Set for Biggest Drop Since 2020 on Sluggish Sales Outlook
(Bloomberg) — Micron Technology Inc., the largest U.S. maker of computer memory chips, is bracing for its biggest share drop in more than four years after its earnings forecast missed forecasts, hurt by smartphone and from sluggish demand for personal computers.
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Sales will be about $7.9 billion in the fiscal second quarter, which runs through February, the company said in a statement Wednesday, compared with an average estimate of $8.99 billion , minus some items, well short of the $1.92 forecast.
Although Micron is seeing strong orders for components used in artificial intelligence computing, it still faces weak demand from phone and PC makers, two markets that consume most of its chip volume.
Shares of Micron, which had risen 22% this year by Wednesday’s close, were down 15% in premarket trading before opening on Thursday in New York, which would be the biggest intraday drop of 2020 since March.
“Although consumer-oriented markets are weaker in the near term, we expect a return to growth in the second half of our fiscal year,” Chief Executive Officer Sanjay Mehrotra said in a statement.
Sales rose 84% to $8.71 billion in the fiscal first quarter ended Nov. 28. Excluding certain items, earnings were $1.79 per share, compared with analysts’ forecasts of $8.71 billion sales and an average profit of $1.76.
The company reported a 400% increase in data center revenue in the quarter, which now accounts for more than half of the company’s total sales, but the growth was not enough to offset weak orders from consumer-facing devices, Micron said. the
In that industry, customers worked through stockpiling.
“We are now seeing a more pronounced impact of the reduction in customer inventories,” Micron said during the investor presentation.
The company predicts that the PC market will grow by about 5% in 2025, with most of the expansion occurring in the second half.It commented that device owners are upgrading them more slowly than expected.
Micron said its mobile business unit suffered a 19% sequential decline, driven by reduced inventory.Automobile and industrial products sales also fell.
The chipmaker is budgeting $14 billion in new plant and equipment spending for fiscal 2025. That amount includes spending cuts on new storage chip production.
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