Citi analyst expects Micron Technology Inc. to report negative gross margins for the first time since 2008 financial crisis but says that could be a good sign.
Micron Technology Inc. may be paying more to make memory chips than the price it is charging for them, according to one analyst who believes that could actually be a good sign.
The last time Micron’s MU gross margins went negative was during the 2008 financial crisis, according to Citi Research analyst Christopher Danely, who believes the company will report negative gross margins when it gives its fiscal second-quarter results on Tuesday afternoon. The silver lining in that cloud: “The last time Micron had negative gross margins, it marked the bottom in the stock,” he said.
Micron did not guide for negative gross margins, predicting a gross margin of 5% to 10% in December, and analysts on average expect gross income of $312 million on revenue of $3.71 billion. Danely, however, believes that this report will come in much worse than the collective consensus on Wall Street for both revenue and net losses, and he also predicts a massive write-down.
Micron specializes in DRAM, or dynamic random access memory, the type of memory commonly used in PCs and data centers, and in NAND chips, which are the flash memory chips used in smaller devices like smartphones and USB drives.
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