Sales by Micron Technology, the U.S.’s largest maker of memory chips, fell short of estimates in the latest quarter, thanks to slowing demand for components of personal computers and smartphones.
Revenue in the quarter that ended Dec. 3 fell 27 percent to $3.35 billion from the same quarter a year earlier, the company said Tuesday. Profit was $206 million, or 19 cents a share, compared with $1 billion, or 84 cents per share, a year earlier.
Micron’s results reflect the challenges facing chipmakers as they seek to squeeze out earnings from a commoditized memory-chip business: Factory output is ramping up across the industry, while demand stagnates. Personal-computer shipments continue to slump as consumers and businesses turn to mobile devices and Web-based software, crimping orders of dynamic random access memory, or DRAM. At the same time, the smartphone business that has driven demand for Nand storage chips is showing signs of slower growth.
“You’ve had oversupply for the whole year,” said Daniel Amir, an analyst at Ladenburg Thalmann & Co. “Those demand drivers are not there to absorb the additional capacity.”
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Micron shares fell in after-hours trading. The stock declined 1.1 percent to $14.61 at the close in New York, leaving shares down 58 percent for the year. That decline has made Micron the second-worst performer in the Philadelphia Stock Exchange Semiconductor Index this year.
Micron forecast even lower sales for the current quarter and a loss of 5 cents to 12 cents a share.
The Boise company is the last U.S. major manufacturer of memory chips. 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’s management has been trying to reduce its dependence on commodity chips and into more profitable areas like memory for servers and other specialist devices. Micron is also making solid-state drives, replacements for hard disk drives made of chips, as a more profitable outlet for its products.
“While conditions in some market segments are challenging, we believe long-term industry fundamentals are healthy, and we remain focused on the deployment of our advanced DRAM and 3D NAND technologies and products,” CEO Mark Durcan said in a news release.
Eight days earlier, Micron said it would buy the rest of Inotera Memories, a Taiwan company that makes DRAM, for $3.2 billion. Micron had owned one-third of Inotera under 7-year-old partnership but bought 100 percent of its DRAM output, accounting for 35 percent of Micron’s DRAM production.
Micron is the Treasure Valley’s largest for-profit employer, with about 6,000 employees. The company employs about 30,000 people worldwide.
The Idaho Statesman contributed.
Consolidated Financial Summary
(in millions except per share amounts)
Cost of goods sold
Selling, general and administrative
Research and development
Other operating (income) expense, net
Interest income (expense), net
Other non-operating income (expense), net (1)
Income tax (provision) benefit (2)
Equity in net income of equity method investees
Net (income) loss attributable to noncontrolling interests
Net income attributable to Micron
Earnings per share:
Number of shares used in per share calculations:
Source: The company