(Bloomberg) -- Micron Technology Inc., the biggest U.S. maker of computer memory chips, posted its biggest stock drop in more than four years after missing earnings forecasts and weaker demand for smartphones and personal computers.
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The company said in a statement on Wednesday that it will post sales of about $7.9 billion in the fiscal second quarter, which ends in February. It is 8.99 billion US dollars according to the average estimate of analysts. Earnings will come in at $1.53 a share, which is lower than expectations of $1.92, excluding certain items.
Despite strong orders for parts used in artificial intelligence computing, Micron continues to face weak demand from cellphone and PC makers, the two markets where it uses most of its chips.
Shares of Micron, which had risen 22% this year through Wednesday's close, fell 15% in premarket trading before the New York Stock Exchange opened on Thursday. If the decline continues, it would be the biggest one-day drop since March 2020.
"While the consumer-facing market remains weak in the near term, we expect a return to growth in the second half of the fiscal year," CEO Sanjay Mehrotra said in a statement.
In the fiscal first quarter ended Nov. 28, sales rose 84% to $8.71 billion. Excluding certain items, earnings per share were $1.79. Analysts, on average, had expected sales of $8.71 billion and earnings of $1.76.
Data center-related revenue rose 400 percent year-over-year in the quarter, the company said. The unit now accounts for more than half of the company's total sales. However, the growth was not enough to offset weak orders from consumer-focused device makers, Micron said.
In this area, customers are dealing with inventory backlogs.
"We are now seeing a more pronounced impact of reduced customer inventory," Micron said in an investor presentation. "We expect this adjustment period to be relatively short and consumer stocks to return to healthier levels by spring."
The company predicts that the PC market will grow by about 5% in 2025, with most of the growth occurring in the second half. It explains that device owners are taking longer to update than expected.
Micron said its mobile business unit fell 19% sequentially due to lower inventory. Auto and industrial sales also fell.
For fiscal 2025, the chipmaker plans to spend $14 billion on new plants and equipment. This amount includes planned cost reductions for new storage chip production.
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