: Micron earnings show spike in memory sales, forecast suggests more of the same as stock pushes higher

Jun 29

: Micron earnings show spike in memory sales, forecast suggests more of the same as stock pushes higher

Micron Technology Inc. shares jumped in after-hours trading Monday after the memory-chip maker said sales jumped in the third quarter and are expected to exceed expectations in the final period of its fiscal year.

Micron MU, +1.35% reported fiscal third-quarter net income of $803 million, or 71 cents a share, compared with $840 million, or 74 cents a share, in the year-ago period. Adjusted earnings were 82 cents a share, compared with $1.05 a share in the year-ago period. Revenue rose to $5.44 billion from $4.79 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 75 cents a share on revenue of $5.27 billion. Shares gained more than 5% in after-hours trading immediately following the release of the results, following a 1.4% gain in the regular session to close at $49.15.

Micron had already informed investors that it would outperform its original expectations. In late May, Micron forecast adjusted earnings of 75 cents to 80 cents a share and revenue of $5.2 billion to $5.4 billion, up from its forecast of 40 cents to 70 cents a share on revenue of $4.6 billion to $5.2 billion back in March.

Micron specializes in DRAM and NAND memory chips. DRAM, or dynamic random access memory, is the type of memory commonly used in PCs and servers, while NAND chips are the flash memory chips used in USB drives and smaller devices, such as digital cameras. While the COVID-19 pandemic has been cited as fueling a boost in memory-chip sales, many analysts suspect that may have oversupplied the market, which could bode poorly for the second half of the year — but not according to Micron’s forecast.

For the fourth quarter, Micron predicted revenue of $5.75 billion to $6.25 billion, which would be a big gain from a year ago and well ahead of analyst estimates. Analysts on average were predicting sales of $5.46 billion, according to FactSet, after Micron reported revenue of $4.87 billion in the fiscal fourth quarter a year ago.

For the year, Micron shares are off about 10%, while the PHLX Semiconductor Index SOX, +1.14% SOX, +1.14% is up 4%. Meanwhile, the S&P 500 index SPX, +1.46% is down 6%, and the tech-heavy Nasdaq Composite Index COMP, +1.19% is up 9%.

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