Micron's Q1 Loss Estimate Soars, Stock Plummets

Micron Technology, a prominent American memory chip manufacturer, has reported a Q1 financial performance that surpassed market expectations, leading to a decline in its stock price during after-hours trading.

As per reports from reputable sources such as Reuters and MarketWatch, Micron unveiled its financial results on the 27th of the month after the close of the US stock market. In the fourth quarter (covering June to August), the company's revenue decreased from $6.64 billion in the corresponding period of the previous year to $4.01 billion. After making adjustments for factors like stock-based compensation, the core business earnings per share amounted to $1.07, a decrease from the $1.45 reported in the same period of the previous year.

Analysts polled by FactSet had projected Micron's Q4 revenue at $3.95 billion and a core business loss of $1.15 per share.

Looking forward to Q1, Micron has forecasted a loss per share in the range of $1.14 to $1.00, with revenue expected to fall between $4.2 billion and $4.6 billion. According to FactSet's survey, analysts had originally predicted a Q1 loss per share of just $0.88 and revenue of $4.24 billion for Micron.

Micron's revenue projection for Q1 has exceeded the expectations of financial experts. This exceptional performance can be attributed primarily to the rapid growth of the artificial intelligence (AI) sector and the increased demand for memory chips used in AI applications. Micron has also announced its collaboration with Nvidia to tailor its recently launched High Bandwidth Memory (HBM) to suit Nvidia's computing chips. The company anticipates commencing mass production of HBM, a highly profitable component used in numerous AI chips, by the year 2024.

Due to security concerns, certain Micron products have faced restrictions on being provided to specific local clients in China. In response to this situation, Sanjay Mehrotra, CEO of Micron, conveyed through a formal statement that although the challenges in the Chinese market may lead to short-term impacts on demand, the company remains steadfast in its commitment to maintaining a significant global market share.

Mr. Mehrotra also emphasized that Micron has implemented decisive measures regarding supply and cost, leading to an upward trajectory in product prices, with the rate of price increases projected to continue until 2024.

Micron envisions a notable improvement in the industry outlook by 2025, especially driven by the demand for new, high-cost memory solutions in AI systems. However, the mid-term outlook presents a mixed picture. Mr. Mehrotra noted that demand for traditional servers remains subdued, but there is optimism for a resurgence in PC and smartphone growth in 2024, with shipment growth rates expected to range from 1% to 5%.

To adapt to the decelerating industry growth, Micron is strategically planning to maintain its production facilities below full capacity until 2024, while concurrently reducing capital expenditures on new equipment.

On the 27th, Micron's stock price experienced a 0.4% increase during regular trading hours, concluding the day at $68.21 per share. However, during after-hours trading, the stock price declined by 4.12% to $65.40 per share.

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