Micron Technology (MU) Shares Tanks as Company Misses on Earnings, Revenue

Shares of Micron Technology Inc. (MU) were trading off -3.52 or -14.65 percent to $20.50 per share in Friday's premarket after the company announced lower than expected earnings for the company's 2015third quarter yesterday after the bell. Micron Technology stock closed at $24.02 per share, down -0.04 or -0.17 percent in Thursday's regular trading session.

Boise, Idaho based Micron Technology Inc. is a transnational corporation focused on the production of semiconductor components.
These include Dynamic Random Access Memory or DRAM, Synchronous Dynamic Random Access Memory or SDRAM, Solid State Drives or SSDs and flash memory chips. Its consumer products are marketed under the brands Lexar and Crucial Technologies. Micron, together with Intel is responsible for the creation of IM Flash Technologies, producer of NAND flash memory. Micron is ranked as one of the world's top 5 semiconductor producing companies.

For the company's third quarter of 2015, which ended June 4, 2015, Micron reported net GAAP income of $491 million, or $0.42 per diluted share compared to net income of $934 million or $0.78 per share in the second quarter and $806 million or $0.68 per share in the same period one year ago.

Third quarter revenue came to $3.85 billion, -8 percent lower than the second quarter and -3 percent lower than 2014's third quarter, while cash flow from operations were $1.34 billion. On a non-GAAP basis, net income for the company's third quarter was $620 million or $0.54 per diluted share versus net income of $941 million, or $0.81 per diluted share in the second quarter. Analysts expected the company to report a profit of $0.57 per share on revenue of $3.94 billion.

The company cited a -10 percent decline in the average selling price of DRAM chips and generally flat sales volume for the chips. Micron reported gross margins of 31 percent for the quarter, a decline of 3 percent over the second quarter.

Mark Durcan, Micron's Chief Executive Officer stated in the company's press release that, "In the fiscal third quarter, Micron experienced market headwinds driven primarily by weakness in the PC sector. We remain focused on the long term as we continue to deploy advanced process technology to enable leading-edge products and drive manufacturing efficiency.

Micron has been attempting to transition according to industry standards, spending more on manufacturing DRAM chips for use in mobile phones. In addition, the company was planning to make 3D NAND chips capable of storing 16 times the data than the chips it currently manufactures.

Micron's now expects revenue of $3.45 billion-$3.7 billion versus an analyst consensus of $4.16 billion. Nevertheless, despite declines in the DRAM market, the company is optimistic that prices will increase once Apple and Samsung release new phone models and Microsoft (MSFT) releases its Windows 10 operating system next month.

Micron Technology stock is down over -30 percent year to date through yesterday's close. This morning's action is a clear signal that the market is not impressed with the company's third quarter results. Micron stock was trading as high as $35 per share at the end of 2014.

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Published on Jun 26, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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