Revenue in the current period will be $5.7 billion to $6.3 billion, the Boise, Idaho-based company said on a conference call. That compares with an average analyst prediction of $7.32 billion. The middle of that range would represent a sales decline of 18 percent, the first year-over-year decrease since 2016. Micron projected profit of $1.75 a share, plus or minus 10 cents, which is also well short of estimates.
Key Insights
Profit, excluding certain items, was $2.97 a share in the fiscal first quarter. Revenue jumped 16 percent to $7.91 billion in the period ended Nov. 29. Analysts had projected profit of $2.95 a share on sales of $8.01 billion, according to data compiled by Bloomberg. Micron's capital spending budget for fiscal 2019 will be cut to $9 billion to $9.5 billion, the company said.
At the midpoint, that's a reduction of $1.25 billion from the previous plan. Micron makes chips used as the main memory in computers and as storage in mobile devices. Increasing demand from data-center operators and in more diverse uses such as cars, has helped drive demand.
Gains have been slowed as some customers built too many stockpiles and cut back orders. Chief Executive Officer Sanjay Mehrotra has been telling investors that this much broader set of customers will help insulate the industry from the brutal downturns that have wiped out profitability in the past. He repeated that theme Tuesday.
CEO's Comments
Mehrotra said he's confident that a buildup of inventory by his customers will be reduced to normal levels in about two quarters. To make sure the situation doesn't get any worse, Micron is cutting its output expansion plans, he said. "Long-term demand trends in our industry continue to be healthy," he said in an interview.
"Micron is better positioned than ever to weather this slowdown, this air pocket, in the industry." "We feel good about the actions we've taken," Mehrotra said. "We feel good about the second half of 2019."
Market Reaction
Micron's stock declined to a low of $31 in extended trading following the announcement after closing at $34.11 in New York. The shares had gained more than 50 percent through the middle of the year, before a sharp fall left them down 17 percent for 2018.
