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End-of-day quote Korea Stock Exchange  -  2022-09-27
81200.00 KRW   -0.98%
06:18aUBS Adjusts SK Hynix's Price Target to 130,000 Won From 155,000 Won, Keeps at Buy
03:26aS.Korean shares, won tumble on recession fears
09/26S.Korean shares drop to lowest since mid-2020 as recession fears grow
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Micron sales, profit miss estimates as chip glut hurts prices

12/18/2018 | 10:53pm EDT
The logo of U.S. memory chip maker MicronTechnology is pictured at their booth at an industrial fair in Frankfurt

(Reuters) - U.S. chipmaker Micron Technology Inc gave on Tuesday quarterly sales and profit forecasts well below Wall Street estimates, citing a market glut of memory chips as consumer and business demand for phones and computers is weakening.

Micron said it expected industry output, including from South Korean rivals Samsung Electronics Co Ltd and SK Hynix, to outstrip demand from the makers of phones, PCs and servers, pushing down Micron chip prices.

Samsung had already warned of a slowdown in demand and drop in chip prices, flagging an end to a two-year boom in memory chips as global demand for mobile and other electronics devices wanes and fresh supplies from Hynix and Toshiba Corp hit the market. Hynix has also offered a downbeat outlook.

Micron Chief Executive Sanjay Mehrotra told investors on a conference call on Tuesday that the company was taking "decisive actions in terms of reducing our production output" to hold the line on prices.

"We are always reviewing how to best align our output with market demand to focus on delivering healthy profitability," Mehrotra said in an interview.

But the glut will hammer Micron in the short term, with the company estimating revenue of $5.7 billion (4.5 billion pounds) to $6.3 billion for its fiscal second quarter and gross margins of 50 to 53 percent, compared to analysts' estimates of $7.3 billion and 55 percent, according to I/B/E/S data from Refinitiv.

Shares of the Boise, Idaho-based company fell as much as 8.5 percent in extended trading after the forecast, before paring losses to 2.8 percent.

Asked about Micron's comments, Hynix told Reuters that in the short term, the memory chip sector would struggle through a period of relatively low growth due to weak demand in the smartphone and PC markets, but the outlook would brighten in the long term.

Hynix shares were down 1.6 percent in late morning trading in South Korea. Samsung shares were up slightly.

"The worse may not be over yet if the end-market demand weakens further," said analyst Kinngai Chan of Summit Insights Group.

Micron is responding to the oversupply of DRAM and NAND memory chips by investing more in its next generation of chips. Major suppliers to smartphone makers such as Apple Inc have lowered their sales forecasts, citing weak demand from device makers.

Data centers, which have been a boon for Micron as cloud computing providers like Amazon.com Amazon Web Services have become massive businesses, were a weak spot in Micron's earnings. On the post-earnings call, Mehrotra cited "inventory adjustments" at data centers for the pressure on revenue.

Several chipmakers have cited strong demand in the months before U.S. tariffs were imposed on some Chinese goods, leaving analysts wondering if data center owners had tried to get in orders ahead of the levies.

"We expect this headwind will persist for a couple of quarters. We are seeing some cloud customers go through a digestion period following very strong growth over the last two years," Mehrotra said.

Stifel analyst Kevin Cassidy said Micron was making the right move by slashing output instead of cutting prices to gain market share as it had in the past.

"We see today's announcements as prioritizing profitability over market share gains," he said.

Micron's gross margin was 59 percent for the fiscal first quarter, and executives said U.S. tariffs on Chinese goods cut its gross margins by about half a percentage point, at the lower end of the negative impact it told investors in September.

Micron is ahead of schedule in addressing the expected impact of U.S. tariffs on its products, Manish Bhatia, Micron's executive vice president of global operations, said in an interview.

"We made very good progress across multiple sites in our (factory) network taking the products that were being made in China and destined for the United States and quickly transferring them to other sites outside of China," he said.

Net sales rose 16 percent to $7.91 billion, short of analysts' expectations of $8.02 billion.

Excluding items, Micron earned $2.97 per share, narrowly beating the analyst average estimate of $2.96, according to I/B/E/S data from Refinitiv.

(Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; additional reporting by Heekyong Yang in SEOUL; Editing by Richard Chang and Muralikumar Anantharaman)

By Sonam Rai and Stephen Nellis

© Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM, INC. 3.15% 118.01 Delayed Quote.-29.22%
APPLE INC. -1.27% 149.84 Delayed Quote.-14.54%
MICRON TECHNOLOGY, INC. 0.83% 51 Delayed Quote.-45.25%
SAMSUNG ELECTRONICS CO., LTD. -2.40% 52900 End-of-day quote.-32.44%
SK HYNIX INC. -0.98% 81200 End-of-day quote.-38.02%
TOSHIBA CORPORATION 2.94% 5219 Delayed Quote.8.92%
WISDOMTREE CLOUD COMPUTING UCITS ETF - ACC - USD 2.35% 26.7175 Delayed Quote.-48.42%
All news about SK HYNIX INC.
06:18aUBS Adjusts SK Hynix's Price Target to 130,000 Won From 155,000 Won, Keeps at Buy
03:26aS.Korean shares, won tumble on recession fears
09/26S.Korean shares drop to lowest since mid-2020 as recession fears grow
09/23Nomura Adjusts SK Hynix's Price Target to 127,000 Won From 130,000 Won, Keeps at Buy
09/23S.Korean won posts seventh weekly loss on slowdown concerns
09/20S.Korean shares rebound on battery makers boost
09/19S.Korean shares end at two-month low ahead of U.S. Fed meet
09/15S.Korean shares fall on foreign outflows, won hits 13-1/2-yr low
09/14South Korean companies that have joined RE100
09/14S.Korean shares, won tumble on U.S. inflation shock
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Analyst Recommendations on SK HYNIX INC.
More recommendations
Sales 2022 50 897 B 35,5 B 35,5 B
Net income 2022 8 689 B 6,06 B 6,06 B
Net Debt 2022 8 156 B 5,69 B 5,69 B
P/E ratio 2022 6,75x
Yield 2022 2,05%
Capitalization 55 837 B 38 973 M 38 973 M
EV / Sales 2022 1,26x
EV / Sales 2023 1,18x
Nbr of Employees 30 520
Free-Float 68,8%
Duration : Period :
SK hynix Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends SK HYNIX INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 34
Last Close Price 81 200,00 KRW
Average target price 127 772,73 KRW
Spread / Average Target 57,4%
EPS Revisions
Managers and Directors
Seok-Hee Lee President, Chief Executive Officer & Director
Jung-Ho Park Co-Chief Executive Officer & Director
Kwon Hong Managing Director & Head-Finance
Tae-Won Chey Chairman-Executive Board
Tae-Hoon Kim Managing Director & Head-Technology
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