Micron Technology shares dropped more than 7 percent during after hours trading Tuesday after the company missed revenue expectations in its quarterly earnings. The company reported $7.91 billion, missing revenue estimates of $8.02 billion. However, it exceeded expectations in earnings, reporting $2.97 per share, beating analysts’ expectations of $2.96 per share.
Shares in Micron, which closed slightly up Tuesday, fell 9% to $31.07 in after-hours trading. The weakness in Micron’s stock in after-hours trading extended to companies in the technology sector including Nvidia Corp. , Lam Research Corp. , and Applied Materials Inc. amid worries that the supply overhang would be more pronounced, and more long-lasting than company executives have indicated.
Chief Executive Sanjay Mehrotra sought to reassure Wall Street that demand would pick up in the second half of 2019. On a conference call, Micron’s CEO Sanjay Sehorta said the revenue headwinds were due to “inventory adjustments.” The company also announced plans to reduce capital expenditures in fiscal 2019.
Micron said the impact of US tariffs were a half percent of its gross margin in the fiscal first quarter. The Boise, Idaho-based company announced in September that President Trump’s tariffs on Chinese goods will hurt its profitability.
“Our gross margins will also be impacted in the near term by the announced 10 percent tariff on $200 billion of imports from China which will go into effect on September 24,” CFO David Zinsner said. “We are working to gradually mitigate most of the impact from these tariffs over the next three to four quarters.”
Micron expects its profit this quarter to fall to about $1.75 a share and revenue to fall to a range of $5.7 billion to $6.3 billion, well short of analysts’ expectations. Micron’s new forecast calls for spending up to $9.5 billion on capital expenditures. Part of that reduction, company officials said, would come from the lower production along with a tighter rein on head count.
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