What: Shares of memory chip manufacturer Micron Technology (NASDAQ:MU) slumped on Friday following the company's fiscal third-quarter report. While Micron's results were mixed relative to analyst expectations, guidance calling for a larger loss during the fourth quarter squelched any hope that a turnaround was imminent. At 11:00 a.m. EDT, the stock was down about 9.5%.
So what: Micron reported quarterly revenue of $2.9 billion, down 25% year over year and about $60 million shy of the average analyst estimate. A difficult environment in the DRAM and NAND markets weighed on Micron's results, and while the company did manage to cut per-bit DRAM costs during the quarter, this was offset by an even steeper decline in the average selling price.
Non-GAAP EPS came in at a loss of $0.08, $0.01 higher than analysts expected. On a GAAP basis, Micron posted a $215 million net loss, or $0.21 per share, down from a profit of $0.42 per share during the prior-year period.
While a few analyst upgrades in recent weeks suggested that the worst for Micron may be over, the company's guidance tells a different story. Micron expects fourth-quarter revenue between $2.9 billion and $3.2 billion, with a non-GAAP loss of $0.16 to $0.24 per share. The company also announced a restructuring initiative that will reduce costs by $80 million per quarter by eliminating about 2,400 positions worldwide, about 7.5% of its workforce.
Now what: A recent recovery in DRAM prices created the expectation that Micron's results would bottom out soon, but the company's abysmal guidance for the fourth quarter has dashed those hopes. Micron's job cuts suggest that the company is bracing for more tough times ahead, and at this point it's impossible to predict exactly when the DRAM and NAND markets will improve enough to turn things around. Given the company's guidance, Micron won't begin to recover until fiscal year 2017 at the earliest.