Micron Technology Inc. has posted another quarter of strong revenue and profit gains amidst high prices for memory chips. In its earnings report on Wednesday, the company forecast was evidence they believe the rise in prices will continue and helped send shares higher during trading after the bell.
Micron profit during the just ended quarter more than doubled compared to the same period one year ago, while sales were up by over 40%. Micron posted net income for its third quarter of just over $3.82 billion equal to $3.10 per share, with sales of $7.8 billion which were up from the same period last year of $5.57 billion.
Following adjustments made for compensation that was stock based and other items, the company posted earnings of $3.15 per share compared to $1.62 per share for the same three-month period one year ago.
Analysts were expecting Micron’s adjusted earnings to be $3.13 per share with sales of $7.76 billion. The company moved its forecast higher to between $3.12 and $3.16 per share with revenue of between $7.7 billion and $7.8 billion from its original forecast of between $2.76 and $2.90 per share with revenue of between $7.2 billion and $7.6 billion.
Late in trading on Wednesday shares pulled back approximately 1% after the earnings report was released, but they turned around after CFO at Micron Dave Zinsner released a forecast for the fourth quarter during a conference call. The forecast beat expectations of analysts as Micron projects its adjusted earnings for the fourth quarter to be between $3.23 and $3.37 per share with revenue of between $8 billion and $8.4 billion, which beat the average analyst forecast for revenue of $8.02 billion and earnings of $3.16 per share.
Shares moved higher right after the CFO released the forecast moving up by 3% at one time. Micron stock has skyrocketed as prices for memory chips have shot upward over the last few years. Over the last year the stock is up 91.4% while the S&P 500 has gained just 13.4%.
The higher prices for Micron’s core products have helped increase its stock. Micron attributed the price increases to the demand of cloud-data centers, in particular those in China.
However, the cost of memory has made Chinese regulators take notice and companies and analysts have said lately they expect price increases to slow down soon and could be as soon as the second six months of 2018.