Micron Technology (NASDAQ:MU) witnessed a 3% dip in its shares after announcing that first-quarter operating expenses are anticipated to exceed initial estimates. Despite projecting revenue to approach the upper limit of its forecast, the memory chipmaker’s shares experienced a downturn.
In the quarter ending November 30, the company estimated adjusted operating expenses to be approximately $990 million, surpassing its earlier expectation of $900 million, with a margin of error of plus or minus $15 million. Micron’s CEO, Sanjay Mehrotra, attributed the elevated expenses to the timing of research and development costs, along with proceeds from asset sales. Speaking at the UBS Global Technology Conference on Tuesday, Mehrotra clarified the factors influencing the increased expenses.
Despite the higher operating costs, Micron expressed optimism regarding the first-quarter adjusted gross margin, projecting it to approach break-even due to enhanced inventory and a resurgence in industry pricing. The company revised its revenue outlook to approximately $4.7 billion, up from the previous estimate of $4.4 billion, with a margin of error of plus or minus $200 million.
Wedbush Securities analyst Matthew Bryson commented on the situation, stating, “I think it’s just general expectations were high heading into this MU’s presentation today given how strong memory fundamentals have been, so the forecast is better, but the improvement was a bit more muted perhaps than expected.”
In contrast to Micron’s update, memory giant Samsung Electronics had previously indicated an anticipation of a chip industry recovery in the coming year after facing a supply glut this year. Micron forecasts a current-quarter adjusted loss per share of about $1, a slight adjustment from its earlier prediction of a loss of $1.07 per share, with a margin of error of plus or minus 7 cents.
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