Micron Technology Reports Record Loss But Stock Rises on Positive Q3 Forecasts and Signs of Market Improvement

Micron Technology Inc. (MU) reported a record loss for the quarter due to inventory write-downs exceeding $1.4 billion. However, the company's stock price rose in after-hours trading as executives indicated that the memory market may soon bottom out.

In Q2, Micron Technology's revenue dropped by about 53% year-over-year to $3.69 billion, below analysts' expectations of $3.73 billion. The company reported a net loss of $2.3 billion, compared to a net profit of $2.26 billion in the same period last year. Diluted loss per share was $2.12, compared to earnings per share of $2.00 in the same period last year. Adjusted loss per share was $1.91, compared to earnings per share of $2.14 in the same period last year, and below analysts' expectations of a loss of $1.65 per share.

Micron Technology CEO Sanjay Mehrotra stated in a prepared statement, "We now believe that customer inventory levels in a few end markets have begun to decrease, and we expect supply-demand balance to gradually improve over the next several months. Excluding the impact of inventory write-downs, we believe our days of inventory outstanding (DIO) on the balance sheet have peaked in the second quarter, and our quarterly performance is approaching an inflection point where revenue will grow sequentially."

Micron Technology's forecast for the current quarter is better than what some analysts had feared, giving hope that the industry's most severe downturn may have ended. In a statement on Tuesday, the company said that sales in the third quarter will be as high as $3.9 billion, compared to analysts' average estimate of $3.75 billion. The company also announced additional job cuts.

Three months ago, Micron announced cost-cutting measures, including a 10% workforce reduction and a slowdown in investment in new production. The company had previously stated that while revenue would improve in the second half of the year, profitability would still be challenging.

Micron Technology said on Tuesday that its total workforce reduction would now reach 15%. According to slides published on its website, Micron will reduce its spending on new factories and equipment by 40% to $7 billion.