Micron Technology Plunges Despite 4th-Quarter Earnings Beat

Revenue tops projections

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Shares of Micron Technology Inc. (MU, Financial) plunged 6.95% to $45.22 in after-hours trading on Thursday despite beating consensus estimates on GAAP earnings for the fourth quarter of fiscal 2019 by 8 cents.

Micron posted 49 cents per diluted share on $4.87 billion in revenue, reflecting a 1.7% increase from the previous quarter. Revenue beat projections by $310 million.

The Boise, Idaho-based semiconductor memory manufacturer also recorded $2.23 billion in operating cash flow, down 17.7% from the previous quarter, and $1.97 billion in total funds used as capital expenditures, a 10.9% drop. As a result, the adjusted free cash flow fell 47.8% to $263 million.

“Micron delivered fourth quarter results ahead of expectations, capping a fiscal 2019 in which we executed well in a challenging environment, significantly improved our competitive position, and returned cash to shareholders through share repurchases,” President and CEO Sanjay Mehrotra said. “We are encouraged by signs of improving industry demand, but are mindful of continued near-term macroeconomic and trade uncertainties. As markets recover, Micron is well positioned to address the robust secular demand for memory and storage solutions.”

The semiconductor company also updated its shareholders with fresh data for the entire year of fiscal 2019. The most significant were GAAP net profit of $6.31 billion or GAAP net earnings of $5.51 per diluted share on $23.41 billion in revenue. The operating cash flow was $13.19 billion in full fiscal 2019, which reflected a 24.2% fall from full fiscal 2018.

Micron allocated $2.66 billion to the repurchase of its own common stock in fiscal 2019 withdrawing approximately 67 million shares.

Regarding the balance sheet, including funds set aside for specific purposes, Micron's balance sheet had $9.25 billion in cash on hand and short- and long-term securities, and a net cash position of $3.40 billion as of Aug. 29.

Looking ahead to the first quarter of fiscal 2020, Micron Technology Inc. expects to post earnings per diluted share of 35 to 49 cents on $4.8 billion to $5.2 billion in revenue. Consensus estimates that earnings per share will be 47 cents on $4.76 billion in revenue.

Micron Technology was around $48.6 per share at close on Thursday for a market capitalization of $53.64 billion. Following a 53% rise this year, the share price is now above the 120-, 70- and 30-day simple moving average lines.

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The 52-week range is $28.39 to $51.39.

Micron Technology Inc. doesn’t pay a dividend.

Wall Street recommends an overweight rating for shares of Micron Technology Inc. with an average target price of $51.52.

Disclosure: I have no positions in any security mentioned.

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