Micron increases FQ4 net income by 76 percent from last year

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Micron offers positive forecast as semiconductor industry begins rebound.

Micron Technology Inc.’s recently published fiscal fourth-quarter financial results showing it improved its net income by 76.1 percent increase from the same period last year. The chipmaker also increased its revenue by 24.43 percent year-over-year.

But the company’s underwhelming outlook for the fiscal first quarter of 2021 prompted a 4.58 percent drop in its stock price.

Micron’s Strong FQ4 Results

In the three months ending September 3, Micron earned $990 million in profit versus $586 million in FQ4 2019. Moreover, it collected $6.056 billion in sales, up significantly from the $4.87 billion it took in the year prior.

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The chipmaker also beat its FQ3 revenue and net income results by 11.36 and 23.28 percent, respectively.

In a press release, CEO Sanjay Mehrotra said Micron’s robust FQ4 performance was due to robust demand for its gaming console, PC, and cloud computing products.

Multiple Challenges Prompt Weak FQ1 Forecast

Despite doing very well in FQ4, Micron is not optimistic about its immediate future.

The corporation anticipates bringing in $5.2 billion in revenue, plus or minus $200 million, against diluted earnings per share (EPS) of $0.39, plus or minus $0.07 in the current period.

In FQ1 2020, Micron sold $5.14 billion worth of semiconductor products and produced EPS of $0.43. MarketWatch notes Wall Street analysts expected the firm to call for $5.27 billion in revenue with $0.66 in EPS.

The company produced a disappointing forecast for a few different reasons.

The biggest factor informing its prediction of limit or no near-term growth is its relationship to Huawei. In FQ4, the chipmaker derived 10 percent of its revenue from the Chinese conglomerate. But the U.S. Department of Commerce recently issued new export controls forbidding businesses from selling American technology to the Sino corporation.

Mehrotra said the loss of Huawei’s business would continue to hurt its sales in FQ2 but not beyond that period.

Micron also stated the coronavirus pandemic had depressed end-market demand for its automotive, mobile device, and consumer electronics products.

That said, the chipmaker expects demand for its core products to rise throughout 2021. The company predicts the global DRAM market will grow by 20 percent next year, and the NAND sector will expand by 30 percent.

Taking all that information into consideration, Micron should be able to overcome its near-term challenges by mid-2021.

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