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Micron (NASDAQ:MU) the stock is in the trenches today after a sharp loss in profits and a disturbing announcement: Micron is laying off 10% of its workforce. What should you know about Micron’s recent layoffs?
Well, on Wednesday night, the Idaho-based company shared its first quarter financial results. Micron failed to meet high and low estimates and shared gloomy projections for the current quarter. Indeed, the chipmaker announced a loss of adjusted earnings per share of 4 cents on $4.09 billion in revenue. That number was slightly below expectations for an EPS loss of 2 cents, on sales of $4.13 billion.
For the current quarter, the company expects an adjusted loss of 62 cents per share on just $3.8 billion in sales. That’s well below Wall Street estimates of a loss of 32 cents a share on $3.92 billion in revenue.
Perhaps most troubling is the year-over-year decline the company has experienced. In the same quarter last year, Micron earned $2.16 a share on revenue of $7.69 billion.
Managing Director Sanjay Mehotra commented on the company’s financial results, as well as the way forward for the company.
“Micron achieved fiscal first quarter revenue and (earnings per share) within indicative ranges despite challenging conditions during the quarter. Micron’s strong technology, manufacturing and financial position puts us on a solid footing to navigate the near-term environment, and we are taking decisive action to reduce our sourcing and spending.
As part of the “decisive actions” mentioned by Mehotra, the company also announced that it would reduce its workforce by around 10% next year. That equates to about 4,800 employees in the latest round of tech layoffs. Indeed, Micron joins the likes of other chipmakers Nvidia (NADSAQ:NVDA) and Qualcomm (NASDAQ:COMQ), which each announced a slowdown in hiring over the past year.
What else do you need to know about Micron lately?
Micron layoffs come amid ‘worst memory chip downturn in 13 years’
Micron’s latest cost-cutting effort is likely a response to deteriorating semiconductor production conditions. Memory chip production is, according to Evercore ISI analyst CJ Muse, in its worst shape in more than a decade.
“While the bulls seem to be anticipating improvement over the next two quarters, we don’t see it that way,” Muse said.. “We are in the worst memory downturn in 13 years and a recovery will simply take time.”
In addition to the layoffs, Micron also announced that it would forego bonuses in 2023 and reduce chip production to match weakening PC demand. The company expects demand to return in 2024, but has suspended share buybacks until then.
As of the date of publication, Shrey Dua did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.