UPDATE: Micron Tech 4Q Loss Narrows; Results Top Views
30 September 2009 - 12:14AM
Dow Jones News
Micron Technology Inc. (MU) sharply narrowed its fiscal
fourth-quarter loss amid prior year write-downs, while also
suggesting the beaten-down markets for memory chips are
recovering.
"The market, while still challenging, is beginning to improve,"
said Micron Chairman and Chief Executive Steve Appleton. The
company said it saw demand increase across several segments,
including computers and mobile products.
Shares of the memory chip maker fell 2% after-hours to $8.23.
The stock through the close had more than tripled in value this
year, as investors saw Micron as one of the likely survivors in an
industry plagued over the last three years by oversupply
conditions.
Micron is the last U.S. maker of a type of computer memory chip
known as dynamic random-access memory, or DRAM. It also makes flash
memory chips, and has suffered along with international peers from
oversupply of both DRAM and flash memory.
But cuts in capacity throughout the industry have helped turn
prices around, and a number of companies have reported recently
that demand is growing.
For the fourth quarter, which ended Sept. 3, revenue dropped 10%
to $1.3 billion from the year earlier period. But sales of DRAM and
flash memory rose 28% and 10% respectively from the third
quarter.
DRAM chips are used in personal computers, while flash memory
chips are found in such devices as MP3 music players and digital
cameras.
Meanwhile, gross margin came in at 13%, the second-straight
quarter of positive margins. Prior to the third-quarter, Micron had
posted three straight quarters of negative readings as the selling
price of chips fell below the cost of producing them.
For the fourth quarter, Micron reported a loss of $88 million,
or 10 cents a share, compared with a year-earlier loss of $344
million, or 45 cents a share. The prior-year results included a
$205 million write-down on memory chips and a $70 million gain
related to price adjustments for chips bought from other
producers.
The latest results topped analysts' expectations. Wall Street
expected a loss of 19 cents a share on revenue of $1.27 billion,
according to a poll by Thomson Reuters.
Micron is growing its share of the current market, said
executives during the company's conference call to discuss the
results. Micron was one of the earliest firms to transition to a
more cost-effective manufacturing technology, and the capital
needed by others to make the transition remains difficult to
find.
"It's gone, it's just not available, and if you can't generate
the cash internally, then you have a very difficult time raising
the money," said Mark Adams, head of worldwide sales for
Micron.
The company said it has seen shortages in specialty DRAM memory
chips and chips used for servers. Meanwhile in its flash memory
unit, smartphones have helped to keep the mobile segment
healthy.
-By Jerry A. DiColo and Kathy Shwiff, Dow Jones Newswires;
212-416-2155; jerry.dicolo@dowjones.com;
Kathy.Shwiff@dowjones.com
(Kevin Kingsbury contributed to this report.)