Micron (NASDAQ:MU) announced that it is cutting the base salaries of top executives, including the CEO, CFO, and other named executive officers, or NEOs. The move is part of the chip maker’s plan to reduce costs and operating expenses.
Per the SEC filing, Micron will cut the CEO’s base salary by 20%. Meanwhile, NEOs, who are Executive Vice Presidents, will take a cut of 15%. Moreover, NEOs, who are Senior Vice Presidents, will see a reduction of 10% in their base pay. Additionally, bonuses for all NEOs have also been suspended for Fiscal 2023.
The company is experiencing sluggish demand for memory chips due to a slowdown in the sales of personal computers and other devices. The weak demand, a steep decline in pricing, inventory issues due to the demand-supply imbalance, and macroeconomic uncertainty are taking a toll on Micron’s financials.
The company delivered weak results in the first quarter. Revenues came in at $4.09 billion, compared to $7.69 billion in the prior-year quarter. Further, it declined significantly on a quarter-over-quarter basis. Meanwhile, its Q1 loss of $0.04 per share was higher than the Street’s estimate of a loss of $0.02 per share.
Is Micron a Buy, Sell, or Hold?
Micron sees continued pressure on its profitability in 2023 due to the supply-demand mismatch. Though the company is taking measures to reduce costs and cushion its bottom line, a lot will depend on the normalization of inventories across the supply chain.
With 15 Buy, six Hold, and two Sell recommendations, MU stock has a Moderate Buy consensus rating. Further, analysts’ average price target of $63.57 implies 5.63% upside potential.