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Micron Technology Profits Surge on Increased Memory Chip Demand

Jun 29, 2017

Micron Technology forecast better-than-expected profit and revenue for the current quarter as it benefits from improved prices of memory chips amid tight supply, coupled with demand from cloud-services providers and smartphone makers.

The company's shares, already up nearly 44% this year, were marginally up after the bell on Thursday.

"We expect healthy industry demand to persist into 2018, reflecting broader trends in the data center and mobile markets," Chief Executive Sanjay Mehrotra said on a call with analysts.

"Revenue from cloud customers was more than 4-times higher year-over-year," Mehrotra said.

Prices of dynamic random access memory (DRAM) chips, used in PCs and servers, have rebounded sharply due to high demand from rapidly growing cloud-services providers and a stabilizing PC industry.

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Micron (mu), which gets about 60% of its revenue from the sale of DRAM chips, said DRAM prices jumped 14% in the third quarter.

"Near term it is going to be PC servers and... mobile is going to be positive for them, particularly with the launch of iPhone 8 coming," Betsy Van Hees, an analyst with Loop Capital said.

"But, it is going to be the cloud that is going to be the next leg of the growth story for them."

Worldwide PC shipments rose 0.6% in the first quarter of 2017, seeing growth for the first time in five years, market research firm IDC said earlier this month.

The company said it is also seeing increasing demand for its chips from the automobile market.

Micron expects revenue between $5.70 billion to $6.10 billion and a profit of $1.73 to $1.87 per share for the fourth quarter.

Analysts were expecting revenue of $5.62 billion and a profit of $1.57 per share, according to Thomson Reuters I/B/E/S.

The Boise, Idaho-based company also reported a better-than-expected quarterly profit and revenue.

Net income attributable to Micron was $1.65 billion, or $1.40 per share, in the third quarter ended June 1, compared with a net loss of $215 million, or 21 cents per share, a year earlier.

Revenue nearly doubled to $5.57 billion.

Excluding items, the company earned $1.62 per share. Analysts had expected a profit of $1.51 per share and revenue of $5.41 billion.

This story has been updated to reflect additional information and alanysis, as it has come available.

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