Sat, Jul 02, 2016 - Page 11 News List

Micron announces layoffs as losses exceed estimates

‘CHALLENGING MARKET’:The slowing computer and smartphone markets, as well as slow implementation of cost-cutting drives, has hurt the firm’s profitability

Bloomberg

Micron Technology Inc, the biggest US maker of memory chips, on Thursday said it was cutting jobs and reported a wider loss than analysts had estimated amid “challenging market conditions.”

Net loss was US$0.21 per share in the fiscal third quarter, compared with a profit of US$0.42 a year earlier. Analysts had estimated a loss of US$0.13 per share.

The company said it would cut an undisclosed number of jobs, saving about US$80 million per quarter in fiscal 2017.

Adjusted loss per share is forecast to be US$0.16 to US$0.24 in the fourth quarter. Analysts’ estimated a profit of US$0.02. Adjusted sales in the fourth quarter are to range from US$2.9 billion to US$3.2 billion, compared with estimates of US$3.2 billion.

Micron competes with larger South Korean rivals Samsung Electronics Co and SK Hynix Inc in the market for memory chips. The three try to balance production of the commodity chips with fluctuations in demand for computers, which is declining, and the smartphone market, which is also slowing.

The ability to cut costs through improving production, which analysts said Micron has been slower to implement, can determine whether they are able to remain profitable in periods of weaker demand.

Micron reported sales declined 25 percent to US$2.9 billion in the quarter ended on June 2. Analysts had estimated US$2.96 billion.

“Although we have made good progress in deploying our advanced DRAM and NAND technologies, we continue to face challenging market conditions,” Micron CEO Mark Durcan said in a statement. “To address the current market environment and strengthen our competitive position, we are implementing a number of initiatives to reduce costs, drive greater efficiencies, and increase focus on our strategic priorities.”

The company continues to take a conservative view of the market, despite chip market price improvements, he said on a conference call.

Micron shares dropped as much as 11 percent in extended trading in New York.

In Taipei trading, shares of Nanya Technology Corp (南亞科技), the nation’s biggest DRAM chipmaker, closed 1.65 percent lower and those of Inotera Memories Inc (華亞科技) — a joint venture between Micron and Nanya Technology — also ended down by 1.15 percent on the Micron news.

Additional reporting by staff writer

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