CNET también está disponible en español.

Ir a español

Don't show this again

Christmas Gift Guide
Culture

Analysts downgrade Micron after earnings

Micron, which has struggled for years to break into the top five PC makers, sees analysts drop their year-end estimates to 30 cents from 55 cents.

Analysts hit Micron Electronics today with nearly a 50 percent cut in its earnings estimates, despite a 25 percent jump in first-quarter earnings and efforts to focus on its e-business strategy.

Micron, which has struggled for years to break into the top five PC makers, saw analysts drop their year-end estimates to 30 cents from 55 cents, based on a consensus of nine analysts who changed their estimates this morning.

And for the second quarter, analysts sharply dropped those figures to 4 cents from 13 cents.

The cause of the concern largely centered around declining PC market share. Although Micron recently jumped into the Web hosting business with two acquisitions, the company's core business remains hardware, where price declines have decimated profits for all but a few. Micron also took a hit in two quarters this year because of product delays at Intel, according to analysts and executives.

"They're getting cut by 50 percent, and that's huge," said Tony Crooks, a spokesman for research firm First Call.

He added that 16 analysts cover the company, and it's likely the others will also revise their numbers before the day is over.

Micron's stock, meanwhile, fell as much as 9 percent in morning trading to 11. Micron's stock has languished around the low-teens since May, having fallen from its 52-week high of 22.62 earlier in the year.

Analysts were concerned with Micron's deteriorating core PC business and declining revenues in its consumer, commercial and government markets. The company's small business market, however, showed some growth.

Micron's earnings for the quarter derived from its SpecTek memory chip business.

"The company derived more than 100 percent of its earnings from the volatile SpecTek division, while its core PC business is still operating at a loss. [The] SpecTek performance is not sustainable," Steve Fortuna, a Merrill Lynch analyst, said in a research note this morning.

Merrill Lynch cut its fiscal year 2000 revenue forecast to $1.08 million from $1.27 million. Micron ends its fiscal year in August.

Meanwhile, Micron yesterday reported a 25 percent increase in its first quarter results.

The computer maker's net profits rose to $14.6 million, or 15 cents a share, for the quarter ending Dec. 2, up from $11.7 million, or 12 cents a share, a year earlier. Revenues, meanwhile, fell to $353 million--down 13 percent from a year ago.