Why Micron Technology, Inc. (NASDAQ: MU) stock is under pressure

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Micron Technology, Inc. (NASDAQ: MU) stock fell over 4.2% in the pre-market session on September 21st, 2018 (as of 9:19 AM GMT-4; Source: Google finance) after the company posted better than expected results for the fourth quarter 2018. However, the stock fell in after hours after the company gave weak future guidance for revenue and earnings per share compared to what analysts had estimated. The company posted operating cash flow of $5.16 billion in Q4 2018, compared with $3.20 billion for the same period last year

MU in the fourth quarter of FY 18 has reported the adjusted earnings per share of $3.53, beating the analysts’ estimates for the adjusted earnings per share of $3.33, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 38 percent to $8.44 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $8.25 billion.

Moreover, MU has increased production DRAM bits per wafer at a higher rate than the industry, reducing the cost gap with competitors. The company is on track to achieve total debt output crossover on 1X nanometer DRAM in the first quarter of fiscal 2019 and have already achieved big shipment crossover for 1X nanometer in the client and graphics markets in the fourth quarter. Further, MU expects 1Y nanometer sales to commence before the end of calendar 2019 with meaningful production increases beginning in the fiscal third quarter as previously announced new cleanroom space comes on line at the Hiroshima facility. MU is also on track to move 96-layer NAND into production this calendar year and the company will continue to ramp it next year, which should provide the company with solid cost reductions in fiscal 2019.

For the first quarter of 2019, MU expects earnings to be in the range of $2.88 to $3.02 a share on revenue expected to be in the range of $7.9 billion to $8.3 billion. Analysts surveyed by FactSet had expected earnings of $3.08 a share on revenue of $8.45 billion. The company expects margins will decrease sequentially due to the announced 10% tariff on $200 billion of imports from China, which will go into effect on September 24. The company is working to remove most of the impact from these tariffs over the next three to four quarters.

Meanwhile, MU has announced that Mike Bokan will become senior vice president of worldwide sales on Oct. 1, succeeding Steve Thorsen, who is retiring from Micron after 30 years.

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