Categories Analysis, LATEST, Technology

Trump tariffs find another victim in Micron, shares slide

Micron (MU) shares opened 5.5% in red during pre-market trading today after reporting market-beating fourth quarter results on Thursday. The stock was hurt by CFO David Zinsner’s revelation that President Donald Trump’s tariffs on Chinese imports will weigh on the company’s margins in the coming quarters, till proper mitigation measures are put in place.

Micron shares slide on trump tariffs
Courtesy: Micron Technologies

The semiconductor giant’s shares had picked up as much as 4% during after-market trading on Thursday, despite the company guiding first quarter results below street estimates. However, Zinsner later clarified during the earnings conference call that the lower guidance projection was due to the expected impact from the 10% tariffs on $200 billion of Chinese goods, which will go into effect on September 24.

For the complete earnings call transcript, click here.

Zinsner added that the company would take up to a year to take appropriate measures to mitigate the losses from these tariffs. “We are working on steps to mitigate that, that obviously take some time. We have to do some things operationally to get ourselves in a place where it isn’t impactful, and so it will be a quarter or two probably before we start to see some benefit from the improvement there,” he said.

The comments sent shares down more than 7% during after-market trading on Thursday, the continuation of which is visible today.

Micron-Gross-Margin-Trend

It may be noted that China is a prime revenue driver for the country, accounting for over 50% of its topline. While it does not make semiconductors in China, numerous assembling and packaging works take place in the country. Therefore, Trump’s tariffs, which will be raised from 10% to 25% by the end of 2018, will likely dent Micron’s gross margins by at least 50 BP.

The Boise, Idaho-based company, which makes memory chips for smartphones, will now be forced to shift at least a part of its Chinese operations to assembly plants in Singapore.

Micron reported better-than-expected fourth quarter earnings of $3.53 per share on a 37.5% increase in net sales of $8.4 billion. The results were driven by strong demand for its DRAM and NAND chips across markets.

Micron Q4 results crush estimates amid strong demand growth

Most Popular

MCD Earnings: McDonald’s comp sales up 12.6% in Q4; profit increases

Fast-food chain McDonald’s Corporation (NYSE: MCD) on Tuesday reported an increase in adjusted earnings for the fourth quarter of 2022 when its revenues remained broadly unchanged. The company said fourth-quarter

GM Earnings: All you need to know about General Motors Q4 2022 earnings results

General Motors Co. (NYSE: GM) reported fourth quarter 2022 earnings results today. Revenue increased 28.4% year-over-year to $43.1 billion. Net income attributable to stockholders increased 14.8% to $2 billion while EPS rose 19.8%

CAT Earnings: Highlights of Caterpillar’s Q4 2022 results

Construction-equipment manufacturer Caterpillar Inc. (NYSE: CAT) reported double-digit growth in fourth-quarter revenues and adjusted earnings. Adjusted net profit increased to $3.86 per share in the December quarter from $2.69 per

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top