Memory chip maker Micron Technology late Monday beat Wall Street's fiscal third-quarter estimates, but the highflying stock was little changed in after-hours trading.
Micron (MU) stock fell a fraction late after closing down nearly 2% to 31.26. The stock hit a 12-year-high 32.43 last Wednesday.
The Boise, Idaho-based company earned 79 cents a share excluding certain items for the quarter ended May 29, up from 4 cents a share a year earlier. Revenue leapt 72% to $3.98 billion. Analysts polled by Thomson Reuters expected Micron to earn 70 cents on sales of $3.89 billion.
Some of the year-over-year revenue gains are attributable to Micron's purchase of Elpida Memory, now known as Micron Memory Japan. It bought Elpida and an 89% stake in Rexchip Electronics Corp., now Micron Memory Taiwan, for a total of $949 million cash in July 2013.
Micron reported a gross profit margin of 34% for its Q3, which was consistent with Q2, "as mix-related decreases in average selling prices were essentially offset by corresponding decreases in manufacturing costs," it said.
Micron now has reported six straight quarters of year-over-year sales growth and five consecutive quarters of profit gains.
Micron is a top maker of memory technology including DRAM memory for personal computers and Nand flash storage for PCs and consumer electronics. Micron competes with Samsung, SK Hynix, SanDisk (SNDK) and Toshiba.
DRAM, short for dynamic random-access memory, accounted for 69% of Micron's revenue, followed by Nand flash with 28%.
As Micron hovered around recent highs, some financial analysts recommended that investors sell Micron stock to lock in gains. As of Monday's close, Micron was up 44% year to date.
For the current Q4, Micron forecast sales of $4 billion to $4.2 billion, with the midpoint slightly ahead of the consensus for $4.06 billion. Wall Street also expects Micron to earn 77 cents a share vs. 20 cents a year ago.
Micron couldn't match investors' elevated expectations, said Patrick Moorhead, an analyst with Moor Insights & Strategy.
"Expectations were way too high," Moorhead said. Micron provided conservative guidance "to look like heroes" when they outperformed, but investors thought they were "sandbagging" results even more, he said.
Micron and other chipmakers are benefitting from better-than-expected business PC sales lately, which is boosting DRAM chip sales, and heightened demand for Nand flash, which is used in smartphones, tablets, solid state drives for notebook PCs, and other devices.
The memory chip market is "feast or famine," Moorhead said. "And right now we're in feast. The fabs are full, demand is high, prices are going up and it's a very good time for Micron and the industry.
Micron's customers are building up supply for devices for the back-to-school and holiday shopping season, Moorhead said. The Nand market should remain in the chip manufacturers' favor for at least another 18 months, until the next generation of fabs come online, he said.
Still, the rise in memory chip stocks has to be making investors a little jittery, Moorhead said.