Micron Technology, Inc.: What’s Boosting MU Stock?

mu-stockWhat Drove MU Stock Wild?

Micron Technology, Inc. (NASDAQ:MU) shot up nearly 10% in after-hours trading on Wednesday, following a strong earnings report that beat expectations. MU stock also posted its first rise in quarterly revenue in nearly two years.

The memory-chip company got a shot in the arm as the stabilizing personal computer (PC) market boosted chip demand and pricing. MU stock was the beneficiary of the strong quarter report, bringing in $0.32 per share versus the estimates of $0.28 per share. (Source: “Chipmaker Micron’s forecast powered by improving PC market,” Reuters, December 21, 2016.)

This was all welcome news for the company, which had faced comparatively poor showings in past quarters, with six straight quarters of sales declines on a year-over-year basis and seven consecutive quarters of earnings per share (EPS) declines. On the whole, however, MU stock has had a pretty stellar 2016, spiking up over 45% since the beginning of the year. (Source: “Micron Technology Stock Jumps On Q1 Earnings Beat, Q2 Guidance,” Investor’s Business Daily, December 21, 2016.)

The average selling prices of DRAM chips rose five percent in the quarter, the company said, which is important, seeing as MU stock drives about 60% of its revenue from DRAM chips. The company had announced last month that it expected slowing industry supply growth for the next few quarters, while overall demand would remain healthy.

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Revenue saw an increase of 18.5% to $3.97 billion. The company’s net income attributable to shareholders fell to $180.0 million, or $0.16 per share, in the first quarter, which ended on December 1. That’s down from $206.0 million, or $0.19 per share, a year earlier.

“Positive market momentum, driven by favorable demand trends and limited industry supply, produced solid results for our first quarter,” Micron CEO Mark Durcan said in a statement. “We continue to make significant progress on our key technology and product initiatives, and we are pleased to have closed the Inotera acquisition on Dec. 6, which we expect to further improve Micron’s strategic position and financial results.”