Micron Technology shares pop after zipping past Wall Street's fiscal 4Q revenue and profit estimates

The US chipmaker Micron Technology (NASDAQ:MU) crushed Wall Street’s estimates on revenue and profit for the fiscal fourth-quarter, defying skeptics who had anticipated the company would see waning demand for its DRAM and NAND flash memory chips.

In the three months ended August 30, Micron reported earnings of US$4.33bn or US$3.56 per share, on revenue of US$8.44bn. The results trounced the expectations of analysts who had forecast that Micron would earn US$3.34 per share on revenue of US$8.25bn.

The results also compared well with the fourth quarter of last year, when Micron reported earnings of US$1.99 per share of US$2.37bn.

“Micron delivered an exceptional fourth quarter and capped record fiscal year results by becoming the second largest semiconductor company in the US,” said Sanjay Mehrotra, Micron’s president and CEO.

“In the fourth quarter, we set revenue records across all our major markets, from automotive and industrial to mobile and cloud data centers,” Mehrotra added.

Investors welcomed the results, pushing shares up 2.8% to US$47.36 in Thursday’s after-hours session.

Read: Goldman Sachs cools toward Micron, downgrades stock to Neutral from Buy

Revenue for the fourth quarter climbed 8% from the prior quarter when it stood at US$7.97bn and it was also up nearly 38% from the year-ago quarter when it amounted to US$6.14bn. Micron’s gross margin, meanwhile, came in at 61% for the fourth quarter compared to 60.6% in the prior period.

The company spent money in the quarter as its net investments in capital expenditures came to US$2.06bn in its fourth quarter and US$8.2bn for the full year of 2018. Micron also reduced its debt burden to US$4.64bn by either repurchasing or converting US$2.23bn in the principal amount of its debt during the quarter and US$6.96bn for the full year.

Analysts at Goldman Sachs this month cooled towards US chipmaker Micron Technology Inc (NASDAQ:MU), downgrading the stock to Neutral from Buy on weaker fundamentals based on anticipated price cuts on waning demand for DRAM and NAND flash memory chips.

Baird analyst Tristan Gerra also recently slashed his price target on the chipmaker to US$75 from US$100 and reduced his full-year earnings estimate for the shares as gross margin near a peak.

Micron is the fourth-largest US-based chipmaker behind Qualcomm Inc (NASDAQ:QCOM), BroadcomInc (NASDAQ:AVGO) and Intel Corp (NASDAQ:INTC). Unlike its larger peers, however, the Boise, Idaho-based company has doubled down on the market for memory chips.

Micron is the second-largest supplier of memory chips globally, offering chips that include DRAM, NAND flash and NOR flash.

Now used in cars, drones, cameras, smart phones and cloud data centers, Micron’s memory chips are used to store information, in comparison to microprocessor chips made by companies like Intel, which provide computing power.

Story by ProactiveInvestors