Micron reports strong earnings on growing demand for remote work devices
Computer chipmaker Micron Technology Inc. is forecasting current-quarter revenue above Wall Street’s estimates as it benefits from the shift to working at home that has been forced on thousands of workers thanks to the coronavirus pandemic.
The forecast followed what was a strong second quarter for the company, which reported a profit of 45 cents per share on revenue of $4.8 billion. Wall Street had the company down for earnings of 37 cents per share on revenue of $4.7 billion.
“Micron delivered solid second-quarter results and revenue at the high end of the guidance range, despite the unfolding COVID-19 pandemic,” Micron Chief Executive Officer Sanjay Mehrotra (pictured) said in a statement.
But it was Micron’s guidance for the next quarter that really set the cat among the pigeons. While most technology firms say they’e expecting to see their revenues bleed due to the ongoing global shutdown, Micron is anticipating the opposite: It forecast third quarter revenue of $4.6 billion to $5.2 billion, the midpoint of which was just above the analyst estimates of $4.87 billion.
Micron’s shares rose more than 5% in extended trading, helped no doubt by some grim warnings from other semiconductor makers such as Apple Inc. supplier Skyworks Solutions Inc., which forecast current-quarter revenue below Wall Street estimates on the same day.
Micron has benefited from a shutdown that has seen thousands of people from across the world forced to stay and work at home as part of an effort to try and contain the coronavirus. Mehrotra said on a post-earnings call with analysts that the company saw huge demand for notebooks that can support work from home and virtual learning.
In addition, the rise of remote work has led to more demand for data center services. For example, the company’s data center business in China saw increased gaming, e-commerce and remote work activities, Mehrotra added.
The CEO explained that the company is now switching its focus from the smartphone sector to the data center to try to meet growing demand that could lead to supply shortages. The company added that it is “evaluating our production levels and capex plans for calendar 2020 and will adjust to the most recent demand requirements.”
Micron’s strong earnings and guidance is a rare example of a silver lining in the current coronavirus cloud looming over the world, said analyst Charles King of Pund-IT Inc.
“The company is profiting from both data center customers spinning up more systems to support increasing Internet and streaming traffic, and endpoint vendors delivering laptops for home-bound workers and students,” King said. “For now, Micron stands out as an optimistic light in what is a generally gloomy time for most IT companies. It will be interesting to see how the company fares as the current situation continues to develop and eventually reach a resolution.”
Moor Insights & Strategy analyst Patrick Moorhead told SiliconANGLE he wasn’t at all surprised to see Micron perform so well.
“In all of my interactions with infrastructure companies and silicon providers, they have been selling as many enterprise computers and as much data center infrastructure as they can,” Moorhead said. “Micron’s earnings today support that.”
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