UPDATE: Micron 3Q Loss Widens On Lower Sales, Write-Down
June 25 2009 - 6:33PM
Dow Jones News
Micron Technology Inc.'s (MU) fiscal third-quarter loss widened
on lower sales and a write-down on the value of its imaging unit,
but its gross margin turned positive after three negative quarters
as the cost of producing chips fell below their selling price.
The loss was the 10th consecutive quarterly loss for the
memory-chip maker.
Micron, the last U.S. maker of dynamic random-access memory
chips, has suffered from three years of oversupply. Cuts in
manufacturing capacity across the sector have helped to stabilize
prices, but demand remains depressed.
For the quarter ended June 4, Micron reported a loss of $290
million, or 36 cents a share, compared with a year-earlier loss of
$236 million, or 30 cents a share. The latest results included a
$53 million write-down on the value of its imaging unit, which it
plans to spin off this quarter. The amount represents Micron's
expected loss on the sale.
Analysts, on average, were expecting a loss of 43 cents a share,
according to a poll by Thomson Reuters.
Revenue dropped 26% to $1.1 billion, below the average analyst
estimate of $1.18 billion.
Revenue from DRAM chip sales grew 14% sequentially because of an
increase in sales volumes. Revenue from NAND flash-memory chip
sales was flat sequentially while the sales volume climbed 20%. The
average selling price increased for all customers except Intel
Corp. (INTC), Micron's joint venture partner. The price to Intel
was lower because of cost reductions in NAND production.
Mark W. Adams, vice president of Micron's worldwide sales, said
on a conference call that the company saw stronger-than-anticipated
demand for its DRAM and NAND bit business. He also said the company
continues to grow share in the NAND market, and that he is more
optimistic about the sector heading into the second half of
2009.
NAND chips are widely used in consumer electronics, such as MP3
players and digital cameras, while DRAM chips are mostly used in
personal computers.
Chief Financial Officer Ronald C. Foster said he expects fiscal
fourth-quarter DRAM cost reductions in the low teens and bit
production increasing in the mid-to-high teens.
Meanwhile, memory-chip production climbed significantly from the
second quarter and sales in Micron's imaging unit jumped 53%
sequentially. Foster said the sharp growth signals a possible
"bottoming out of demand in the mobile markets combined with some
seasonal effects."
Foster also said the company is continuing to "scale down"
operating costs as it was aggressive in the third quarter, reducing
selling, general and administrative costs to $80 million. The
company expects those same expenses to be between $75 million and
$80 million in the fourth quarter, driven by the sale of Aptina
Imaging Corp., expected to occur at the end of the quarter.
Micron's gross margin rose in the third quarter to 9.7% from
3.2% on lower manufacturing costs.
Micron's shares recently fell 3.2% to $5.13. The stock has lost
a third of its value in the past year but has more than tripled
from its 18-year low in November.
-By Aja Carmichael, Dow Jones Newswires; 212-416-2187;
aja.carmichael@dowjones.com
(Kathy Shwiff also contributed to this report.)