Micron sees demand coming back, helping with inventory levels

Shares of Micron (MU) were on the rise in late trading on Monday as the company's CFO spoke during the KeyBanc Capital Markets 21st Annual Technology Leadership Forum. David Zinsner said that "demand has come back," and sees inventory levels coming down in the fourth quarter and during fiscal year 2020. DEMAND HELPING WITH INVENTORY LEVELS: During the KeyBanc technology leadership forum, Zinsner said that, "We've been through a couple of quarters of a downward cycle caused by a few different factors. We've had inventory building at some clients, CPU shortages that impact client space, some less than robust sales for high-end cellphones and handhelds which impacted and that put a lot of pressure on the demand side of the equation of our business. (...) Still, we still had a pretty good quarter. We would've hit the high point of guidance if it hadn't been for the situation with Huawei and hadn't stopped shipments." Discussing the current year, Zinsner noted that the "only thing that you can take away as negative is inventory levels." The company expect to have inventory come down in the fourth quarter - at least down to 140 days - noting that Micron has "a pretty good path to bring it down during fiscal year 2020." "And what is helping us is demand has come back. (...) We're also seeing very good elasticity in NAND and that demand is also helping improve our inventory demand," the company's CFO added. The company acknowledged that it didn't expect to see the level of decline for DRAM, NAND seen this cycle. Over the next 10 years, Micron sees opportunities in the cloud cycle as "we move into AI," 5G and autonomous driving, added the executive. TRADE WAR: Asked about the current U.S.-China trade war, Zinsner said that, Micron has "a global footprint." He added: "To the extent that this trade disputes manifest in a more expensive way, we do have the flexibility to move things around (...) These issues do cause some economic turmoil. We have to be flexible regarding our expectations." PRICE ACTION: In late afternoon trading, shares of Micron gained about 1.5% to $42.14.

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