Micron weakness hits Dell, HP, semiconductors as consumer electronics demand seen waning
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Micron Technology (NASDAQ:MU) issued weak guidance for its fiscal fourth-quarter, negatively impacting PC makers such as Dell Technologies (NYSE:DELL) and HP Inc. (NYSE:HPQ), as well as other semiconductor companies on continued worries over waning demand for consumer electronics.
Dell (DELL) shares fell more than 7% to $42.83, while HP (HPQ) lost nearly 3.5% to $31.36 on heavier than normal volume.
Research firm Gartner recently forecast that PC shipments would decline 9.5% in 2022, citing a "perfect storm" of events, including geopolitical upheaval, inflation, volatile currencies and supply chain disruptions.
On Thursday, Micron (MU) warned that fourth-quarter revenue would be well below Wall Street estimates, as it expects sales to be between $6.8B and $7.6B, with adjusted earnings per share between $1.43 and $1.83 per share. Analysts were expecting Micron (MU) to generate $9.05B in revenue and adjusted earnings of $2.62 per share.
Micron (MU) Chief Executive Sanjay Mehrotra said industry demand had weakened "recently," citing weakness in PCs and smartphones. He said the company would take actions to moderate supply growth in fiscal 2023.
Micron's (MU) outlook hit the shares of several semiconductor companies, including Nvidia (NASDAQ:NVDA), Advanced Micro Devices (AMD), Intel (INTC), Qualcomm (QCOM) and Marvell Technologies (MRVL), all which fell nearly 4% in mid-day trading.
Chip equipment makers such as Lam Research (LRCX), Applied Materials (AMAT) and KLA Corp. (KLAC) all fell nearly 7% after Bank of America analyst Vivek Arya warned that Micron's decision to cut spending on tools would impact the trio.
Arya subsequently downgraded Micron (MU) shares, citing the impact from weak PC and smartphone sales, China lockdowns and slower enterprise sales.
Last month, Bernstein analyst Toni Sacconaghi said recent activity suggests that Michael Dell could take Dell Technologies (DELL) private again, but he added that it would take a series of particular events to happen.