China Ban
Of late, there has been a dip in new orders, and that resulted in inventory buildup. While the management is taking measures to overcome the crisis, for the time being, the topline will likely remain under pressure since China and Hong Kong account for about a fifth of the company’s revenues. Meanwhile, Micron stands to benefit from the growing demand for AI-supported systems due to the extensive use of memory chips in them.
Q4 Report Due
Micron’s fourth-quarter earnings report is scheduled for release on September 27, after the closing bell. The bottom line is expected to remain in the negative territory this time too. Market watchers forecast a loss of $1.18 per share for the August quarter, excluding one-off items, compared to earnings of $1.45 per share in the fourth quarter of 2022. The bearish outlook reflects an estimated 41% fall in revenues to $3.91 billion.
The guidance issued by the company a few months ago projects fourth-quarter revenues of approximately $3.90 billion and an adjusted net loss of $1.19 per share. The management is looking for an adjusted gross margin of around (-)10.5% and operating expenses of approximately $845 million.
“Market recovery can accelerate if there is further reduction in industry production and these cuts are sustained well into calendar 2024. In response to the industry environment, Micron has taken decisive actions to bring our supply back in balance with demand. We expect Micron’s year-on-year bit supply growth to be meaningfully negative for DRAM. We also expect to produce fewer NAND bits in calendar 2023 than in calendar 2022. Our fiscal 2023 CapEx plan of $7 billion is down more than 40% from last year, with WFE down more than 50%. We continue to expect fiscal 2024 WFE to be down year-on-year,” said Micron’s CEO Sanjay Mehrotra at the last earnings call.
Loss in Q3
In the most recent quarter, Micron incurred a third consecutive loss, but it was better than the outcome analysts had predicted. In the trailing two quarters, the bottom line missed estimates, reserving the long-term trend of consistent earnings beats. Third-quarter revenues declined a dismal 57% to $3.75 billion but exceeded Wall Street’s expectations. All four operating segments contracted in double digits.
On Wednesday, shares of Micron opened slightly above $70, which is up 42% from last year. They traded lower in the early hours of the session.