Micron Technology Inc. shares rose in the extended session Wednesday after the memory-chip maker’s chief executive called the bottom on the sector, and revenue came in slightly higher than expected.
Micron
MU
shares rose 4% after hours, following a 0.4% gain in the regular session to close at $67.07, while the S&P 500 index
SPX
declined less than 0.1%.
The Boise, Idaho-based company reported a third-quarter loss of $1.9 billion, or $1.73 a share, versus net income of $2.63 billion, or $2.34 a share, in the year-ago period.
The adjusted loss, which excludes stock-based compensation expenses and other items, was $1.43 a share, versus net income of $2.59 a share in the year-ago period.
Revenue dropped to $3.75 billion from $8.64 billion in the year-ago quarter, as a two-year shortage of chips, triggered by the COVID pandemic, flipped quickly, but unevenly, into a glut around this time last year. Analysts surveyed by FactSet had forecast a loss of $1.61 a share on revenue of $3.65 billion.
“We believe that the memory industry has passed its trough in revenue, and we expect margins to improve as industry supply-demand balance is gradually restored,” said Sanjay Mehrotra, Micron chief executive, in a statement. “The recent Cyberspace Administration of China (‘CAC’) decision is a significant headwind that is impacting our outlook and slowing our recovery.”
Micron forecast an adjusted loss of $1.26 to $1.12 a share on revenue of $3.7 billion to $4.1 billion for the fourth quarter. Analysts had estimated a loss of $1.07 a share on revenue of $3.88 billion for the fourth quarter, and a loss of $4.65 a share on revenue of $15.32 billion for the year.
“Longer-term, Micron’s technology leadership, product portfolio and operational excellence continues to strengthen our competitive positioning across diverse growth markets, including AI and memory-centric computing,” the CEO said in a statement.
Micron makes two types of memory chips: DRAM, or dynamic random access memory, the type of memory commonly used in PCs and servers, and NAND, the flash memory chips used in smaller devices like smartphones and USB drives. After prices for memory soared early in the COVID-19 pandemic, companies overbought large stores of chips to avoid shortages, creating a glut.
Leading up to earnings, analysts have said that Micron is “at the bottom of this deep downturn,” but “China complicates the recovery plan.” For the year, Micron shares are up 34%, compared with the S&P 500’s 14% gain.
Read More: Micron stock rises as CEO calls bottom in memory-chip market