UPDATE 2-Micron shares slide as U.S. tariffs weigh on outlook

(Adds information about forecasts, stock moves)

Sept 20 (Reuters) - Shares of chipmaker Micron Technology Inc on Thursday reversed earlier gains as executives gave a lower-than-expected sales and margin forecast and said U.S. tariffs on Chinese goods would weigh on its financial results for as much as a year.

The memory chipmaker, whose NAND and DRAM chips help power smartphones and servers, said that U.S. tariffs of 10 percent $200 billion of Chinese goods that go into effect on Sept. 24 played a big role in its gross margin forecast. Chief Financial Officer David Zinsner said Micron expects to be able to work through the blow from tariffs but that it will take up to a year.

"Clearly, tariffs are impacting us, probably to the tune of 50 to 100 basis points," Zinsner said. "We are working on steps to mitigate that. That obviously takes some time."

Micron now sees gross margins in the current fiscal first quarter between 57 percent and 60 percent. The Boise, Idaho-based company expects quarterly revenue between $7.9 billion to $8.3 billion.

Analysts had been forecasting revenue of $8.4 billion in the first quarter and gross margins no lower than 59.6 percent, according to Thomson Reuters I/B/E/S.

Shares dropped 7.1 percent to $42.79 in after-hours trading.

Zinsner said the lower revenue forecast was partly attributable to a shortage of CPU chips for personal computers and laptops.

"They're a big driver of obviously why we guided in that direction," Zinsner said on the call. "I don't know exactly how long the CPU shortage will last."

Several other technology companies such as Dell Inc have also pointed to a CPU shortage weighing on revenue forecasts. Intel Corp is the dominant supplier of such chips. Intel did not immediately respond to a Reuters request for comment on Micron's comments.

Earlier on Thursday, Micron shares had risen 2 percent to $47 in extended trading after the company reported fourth-quarter revenue and profit that beat analysts' estimates, driven by demand for its memory chips from data centers and smartphones.

Micron has been benefiting from a global memory chip industry boom since late 2016, with strong demand for its products from smartphones and companies shifting to the cloud.

However, concerns that the industry super-cycle may be coming to an end due to oversupply have kept investors on edge who are closely watching NAND and DRAM chip price trends.

Bloomberg on Thursday reported that Samsung Electronics Co Ltd, the world's biggest supplier of memory chips and Micron's chief rival, may cut back on memory chip production to keep supplies tight and prices high. Samsung did not respond to Reuters requests for comment on the report.

Net income attributable to Micron rose to $4.33 billion, or $3.56 per share, in the fourth quarter ended Aug. 30 from $2.37 billion, or $1.99 per share, a year earlier.

Net sales rose 38 percent to $8.44 billion. Excluding items, Micron earned $3.53 per share. (Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; Editing by Maju Samuel and Lisa Shumaker)

09/20/2018 18:06

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