Micron Issues Another Muted Outlook After Missing Expected Sales Results

Micron said sales fell 20% to $6.64 billion and its profit sank 45% to $1.49 billion in its fiscal fourth quarter. Analysts polled by FactSet expected $6.73 billion in sales and profit of $1.48 billion.

Deteriorating market conditions have prompted Micron to issue a subdued outlook for the second straight quarter. The company is predicting sales of $4.25 billion for the current quarter. Analysts surveyed by FactSet have been projecting sales of $5.71 billion for the period ending Nov. 30. Micron said sales in the following quarter ended in February should be roughly similar to those in the current quarter, also short of Wall Street’s expectations.

Micron, which makes data-storage and memory chips for computers and smartphones, had enjoyed a major upswing in sales and profit during the pandemic, benefiting from surging demand for electronics amid the work-from-home shift. But personal-computer and smartphone sales are on the decline this year.

The Boise, Idaho-based company in August warned that it expected a challenging market environment in the latest and current quarters due to macroeconomic factors, supply-chain constraints and broadening customer inventory adjustments. Micron in June said it expected fourth quarter revenue of about $7.2 billion and earnings per share of about $1.52.

Global PC shipments are set to decline 12.8% this year, with those of tablets retreating 6.8%, data analysis firm IDC said this month. “Further contraction is also expected in 2023 as consumer demand has slowed, the education demand has been largely fulfilled, and enterprise demand gets pushed out due to worsening macroeconomic conditions,” IDC said.

The firm predicts the combined PC and tablet market will contract a further 2.6% next year, before growth resumes in 2024.

Smartphone sales, which have also been down this year, should see some rebound in 2023, Mr. Mehrotra said, driven in part by China recovering from Covid lockdowns.

Shares of Micron ticked down more than 1% in after-hours trading. The stock closed Thursday at $50.01, down 1.9%.

Mr. Mehrotra said the company was moving to limit oversupply, including by lowering factory utilization and reducing capital expenditure, now expected to be $8 billion in the company’s current fiscal year, or 30% lower than a year prior.

Those cuts should help restore better supply-demand balance, he said. “We expect the inventory at our customers to improve in early calendar 2023, causing demand to rebound starting from the second quarter of calendar 2023.”

Even so, Mr. Mehrotra said, industry profitability would be challenging in 2023.

The company also said it would suffer over $1.5 billion in negative free cash flow in the November quarter and the following quarter could also be difficult. The company expects to return to free cash flow generation in the second half, it said.

Write to Denny Jacob at [email protected]