Micron's stock loses as a result of disappointing earnings forecasts

Shares in Micron Technology Inc. went from gain to loss in the extended session, after the chip maker's predictions did not live up to Wall Street's estimates.

Micron

MU, + 2.22%

Stocks rose 5% after hours after a solid quarterly earnings report, but were down 4.5% in the late afternoon. At closing, Micron's shares were up 12% versus 10.7% for the PHLX Semiconductor Index.

SOX, + 1.17%

, A 9.6% increase in the S & P 500 index

SPX, + 0.78%

and a gain of 16.3% on the Nasdaq Composite Index

COMP + 0.98%

.

During the company's earnings conference call, Micron Chief Financial Officer Dave Zinsner forecast earnings of $ 2.88 to $ 3.02 per share for $ 7.9 billion in revenue at $ 8.3 billion. Analysts surveyed by FactSet expected a profit of $ 3.08 per share on a turnover of $ 8.45 billion.

The shares, which had risen 4.3% after a few hours early in the call, fell sharply into the red just after Zinsner's forecast. The weak forecast was partly attributed to a shortage of centralized processing units during the quarter, which led PC manufacturers to reduce their production and memory chip orders.

Zinsner also indicated that margins will decrease sequentially due to new tariffs on goods imported from China.

"Our gross margins will also be affected in the short term by the announced 10% tariff on imports of $ 200 billion from China, which will come into effect on September 24," he said Thursday. "We are working to gradually reduce the impact of these rates over the next three to four quarters."

The company reported net income of $ 4.33 billion, or $ 3.56 per share, for the fourth quarter, compared with $ 2.37 billion ($ 1.99 per share) for the same period last year. last year. After adjusting for stock-based compensation and other effects, Micron claimed a profit of $ 3.53 per share. Micron was expected to post an adjusted profit of $ 3.33 per share, according to analysts surveyed by FactSet, after Micron had forecast between $ 3.23 and $ 3.37 per share.

Turnover reached $ 8.44 billion, compared to $ 6.14 billion last year. Wall Street expects revenue of $ 8.25 billion, according to analysts surveyed by FactSet. Micron had forecast revenues of $ 8 to $ 8.4 billion.

"In the fourth quarter, we set revenue records in all our major markets, from automotive and industry to mobile and cloud data centers," said Sanjay Mehrotra, Micron's Managing Director, in a statement. During the conference call, Mehrotra said that more than one-third of fiscal year 2018 revenues came from sales of data centers and charts.

Micron also announced that Mike Bokan will become the Senior Vice President of Global Sales on Oct. 1, succeeding Steve Thorsen, who is retiring from Micron after 30 years.

On Thursday, Micron shares ended higher after Mizuho analyst Vijay Rakesh said he was waiting for Samsung Electronics Co.

005930, + 2.38%

will be "very disciplined" by reducing the production of memory chips in 2019 to cope with a glut of supply. Rakesh has a note of purchase on Micron. This optimism followed a wave of questionable analyst ratings regarding the memory market.

Of the 33 analysts who cover Micron, 24 have buy or overweight ratings, 9 have holding ratings and no one has a sale or underweight rating. Following a wave of price declines by only 10 analysts in September alone, the average price target of $ 76.04 was met.

Get the stories of the day delivered to your inbox. Subscribe to MarketWatch's free Tech Daily newsletter. register here