Chipmaker Micron Technology (MU) reported a sharp increase in first-quarter earnings, which also exceeded estimates. But the company’s revenues missed the street view, hurt by the ongoing slump in the demand for microprocessors, triggering a stock selloff.
Earnings, adjusted for one-time items, grew 21% annually to $2.97 per share in the first quarter, surpassing market expectations. Unadjusted profit moved up to $3.29 billion or $2.81 per share from $2.68 billion or $2.19 per share in the first quarter of 2018.
Driving the profit growth, revenues of the Boise, Idaho-based company jumped 16% to $7.91 billion, aided by diverse demand growth and double-digit increase across the main business segments. The top line, meanwhile, came in below the estimates.
“Despite weak near-term industry supply-demand dynamics entering calendar 2019, Micron is well-positioned to deliver healthy profitability throughout the year. We remain bullish on the long-term secular growth trends driving the memory and storage industry,” said Micron CEO Sanjay Mehrotra.
Driving the profit growth, revenues jumped 16%, aided by diverse demand growth and double-digit increase across the main business segments
In the fourth quarter of 2018, Micron’s earnings rose to $3.53 per share from $2.02 per share in the preceding year, supported by a 38% growth in revenues to $8.44 billion.
Analysts are of the view that the semiconductor industry is heading for a not-so-exciting 2019, going by the negative outlook for the DRAM and NAND prices and tariff-related issues. Adding to the woes, market leaders like Intel (INTC) and AMD (AMD) are witnessing a drop in orders from Apple (AAPL), one of their key business partners, reflecting the scaling down of iPhone production.
Intel is slated to report its fourth-quarter results on January 24 after the bell, while AMD will be announcing results for the most recent quarter on January 23 after the market closes.
Micron shares have fallen 25% since the beginning of the year, all along underperforming the market. The stock closed Tuesday’s regular trading session higher, but dropped after the earnings report.