Micron Technology Inc, the biggest US maker of personal-computer memory chips, posted a fiscal third-quarter loss because prices for its chips sank as PC demand tumbled.
The loss from continuing operations was US$301.1 million, or US$0.50 a share, compared with profit from continuing operations of US$289.8 million, or US$0.50, a year ago. Sales in the period ended May 31 fell 47 percent to US$818.3 million from US$1.55 billion.
PC sales have slumped this year as consumers and businesses delay purchases while economic growth slows. Analysts expect PC shipments of 29 million units in the calendar second quarter, down from 32.5 million in the first quarter. That's pushed the market price of memory chips down 63 percent this year, hurting sales at Micron and rivals.
"Prices have come down considerably," said Thomas Weisel Partners analyst Eric Ross, who rates the stock a "strong buy."
Micron was expected to report a loss of US$0.15 share for the quarter, the average estimate of analysts polled by First Call/Thomson Financial. Forecasts ranged from a profit of US$0.01 to a US$0.31 loss. Because chip prices vary during a quarter, it's hard to predict the company's results.
The shares of Boise, Idaho-based Micron slipped to US$36.41 after the report. They rose US$0.87 to US$37.71 in regular US trading before the release. They've lost 58 percent of their value in the past year.
The loss for the recent period includes a pretax inventory write-down of US$260 million. Majority-owned Micron Electronics Inc sold its PC business during the quarter. Including discontinued operations from that business, Micron Tech posted a final loss of US$313.4 million, or 53 cents a share, compared with net income of US$274.8 million, or US$0.47, a year earlier.
The price for Micron's chips dropped about 35 percent from the previous period, and is still falling, the company said. A 128-megabit chip now costs US$3, down from US$4.50 during the fiscal second quarter, Chief Financial Officer Wilbur Stover said on a conference call.
PC makers are including more bits of memory in each system as the prices fall. Micron said its megabit shipments climbed 20 percent during the quarter.
Demand may pick up when the back-to-school shopping season starts in the August quarter. Still, Micron executives said they haven't seen any definitive signals that sales will improve.
"We are not seeing any strong signs of a broad-based demand recovery in the immediate future, but there are some positive data points," Vice President Mike Sadler said on the call.
Micron cut its capital spending target for this fiscal year again, to US$1.8 billion from the US$2 billion it had planned.
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