Micron (MU) Shares Pummeled on Lower Guidance, Layoffs
Shares of Micron Technology (MU) were trading down -1.21 or -8.79 percent to $12.55 per share after the company reported lower than expected third quarter revenue missing Street expectations yesterday after the market close. In addition, the company announced it would be laying off part of its workforce citing weaker than expected growth prospects. Micron Technology stock closed at $13.76 per share, up +0.57 or +4.32 percent in Thursday’s regular trading session.
Boise, Idaho based Micron Technology Inc. is a transnational corporation focused on the production of semiconductor components.
For Micron’s third fiscal quarter of 2016, the company reported a loss of $215 million or -$0.21 per share, which compares to a net loss of -$97 million or -$0.09 per diluted share in Micron’s second quarter of 2016. Last year’s third quarter had the company earn $0.54 per share. Adjusted for onetime gains and costs, the company’s loss came to -$79 million or -$0.08 per share compared to a net loss of -$48 million or -$0.05 per share in the previous quarter.
Micron’s revenue for the quarter came to $2.9 billion versus $3.85 billion in the same period one year ago, a decrease of -24.7 percent. So far, Micron has reported lower revenue in the last six quarters. The analyst consensus was for the company to report a loss of -$0.09 per share on revenue of $2.96 billion.
According to the company, third quarter revenues were slightly lower due to sales increases in DRAM products that were offset by decreases in the sale of Non-Volatile products. DRAM revenues rose in the third quarter due to a +22 percent increase in unit sales which were partially offset by an 11 percent decline in average selling prices.
Non-Volatile product sales decreased partly due to a 10 percent decline in unit sales and a six percent decline in average selling prices. Consolidated gross margin came to 17 percent for the quarter, three percent lower than in the second quarter due to lower average selling prices, in part offset by manufacturing cost reductions.
Mark Durcan, Micron’s Chief Executive Officer noted in the company’s press release that, “Although we have made good progress in deploying our advanced DRAM and NAND technologies, we continue to face challenging market conditions. To address the current market environment and strengthen our competitive position, we are implementing a number of initiatives to reduce costs, drive greater efficiencies, and increase focus on our strategic priorities.”
The company will begin a program for cost savings that will include a reduction in Micron’s global workforce. As a result of the workforce reduction and other measures, Micron expects savings of over $300 million for its fiscal 2017 year.
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