Unfortunately for Micron Technology, Wall Street analysts estimated increased revenue which the company simply didn’t expect themselves. Micron expects revenue between $4.1 billion and $4.3 billion, shy of the $4.614 billion estimated by analysts.
Micron isn’t doing badly, however, and the stock drop is expected to be temporary and possibly even a boon to investors looking to take an opportunity to invest in Micron. Micron’s lower than estimated revenue numbers are partly due to the quietness of the season and the fact that they are upgrading their DRAM production lines. Micron’s CEO pointed out that they are simply taking advantage of a low point or “normally seasonally slower demand period” in order to get in some upgrades which will allow them to meet future demand which is expected to continue to grow.
2014 was an outstanding year for Micron in general, so a bit of a drop is not terribly disappointing at this moment. Their stock grew 60% last year as revenues, driven primarily by high demand for their DRAM products, boomed. Micron also acquired DRAM maker Elpida Memory in Japan, adding to their overall production capacity with a respected and consistent producer.
Overall, it looks like investors can’t complain about their Micron stock and the growth over the last 12 months would be considered a gift no matter what the current lull may feel like. Micron earned 97 cents per share last quarter with an expectation of 92 cents per share from analysts, and a year before they added just 30 cents per share.
Booming DRAM demand is partly to do with the high demand for smartphones, tablet, and other ‘smart’ gear which has been and will be hitting the market over the next few years. Intel has already demonstrated that they are moving towards gadgets from wearable computers to tiny drone bracelets capable of taking selfies on behalf of their wearer and avoiding obstacles. The Internet of Things has signaled a need for both memory and security across the market, with priority being given to major data centers and their ability to protect the web of smart devices from threats.
Micron has so far demonstrated their ability to stay on top of and ahead of demand andtechnology requirements, which places them in a good position to grow further in the coming months. A little bit of under reporting will only make them more attractive to investors once again, and they should be doing just fine.