Chipmaker Micron Technology Inc (NASDAQ:MU) forecast lower revenue for the current quarter, saying it was willing to hold inventories longer in the face of waning customer demand for electronics featuring its technology.
Shares initially jumped 5 percent in after-hours trading when the company's quarterly revenue and profit beat analysts' estimates. But after the damp forecast, the stock fell 1.4 percent below its closing price of $27.13.
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The stock slid after Micron CEO Mark Durcan told analysts on a conference call that he expected fiscal third-quarter revenue of $3.8 billion to $4.05 billion. That is below the $4.29 billion, on average, that Wall Street analysts were expecting, according to Thomson Reuters I/B/E/S.
"This guidance indicates a willingness to hold inventory if needed," Durcan said, indicating weakness in the end-market for PCs and other electronics.
Earlier, Micron, which makes dynamic random access memory (DRAM)and NAND flash memory chips, said fiscal second-quarter revenue rose 1.4 percent to $4.17 billion, narrowly beating the average analyst forecast of $4.15 billion.
NAND flash memory chips are widely used in smartphones, cameras and other mobile devices to store music, pictures and other data. DRAM chips are mostly used in personal computers.
The weak revenue forecast is the latest blow in a rough stretch for semiconductors. Nearly $50 billion was wiped off the market value of global tech hardware and chipmakers in three days last week, amid worries about PC shipments, sluggish forecasts and broker downgrades.
Last month, Intel slashed nearly $1 billion from its first-quarter revenue forecast to $12.8 billion, plus or minus $300 million, as small businesses put off upgrading their personal computers.
In January, Micron warned that it expected a drop in output in the second quarter, a seasonally slower period, as the company upgraded its production lines with new technology.
For the fiscal second quarter, net income attributable to Micron rose to $934 million, or 78 cents per share, for the second quarter ended March 5, from $731 million, or 61 cents per share, a year earlier.
Excluding items, Micron earned 81 cents per share in the quarter. Analysts on average had expected 73 cents per share.
(Reporting by Anya George Tharakan in Bengaluru and Bill Rigby in Seattle; Editing by Sriraj Kalluvila and David Gregorio)