DRAM sales boost Micron earnings
Micron Technology beats third-quarter expectations due to strong sales of memory products and increased production of its latest 16-megabit DRAM chip.
The company's stock gained over 4 percent in trading today, closing at 42-1/2, up from Friday's close of 40-3/4.
For the quarter ending May 29, Micron reported net income of $97 million, or 44 cents per share, compared to net income of $58 million, or 27 cents a share, for the corresponding quarter a year earlier.
Wall Street analysts were expecting the company to report profits of 39 cents a share, according to First Call.
Sales grew to $965 million in the quarter, up from $771 million last year.
While LG Semicon, Samsung, and other South Korean DRAM manufacturers have been curtailing production since last December to avoid a collapse in prices for 16-megabit chips, "Micron appears to be making a large percentage of the industry's profit right now and is able to gain large market share," said a recent Merrill Lynch report.
Micron currently holds 14 percent of the market, according to the report. The firm expects Micron to move towards 20 percent, making it "one of the fastest-growing semiconductor companies."
The company attributes the growth to strong sales of semiconductor memory products, which grew to $511 million, up from $416 million last year. Increased production of the latest version of its 16-megabit DRAM and the conversion from 6-inch to 8-inch wafer processing also fueled growth.
Gross margins on sales of semiconductor memory products improved to approximately 49 percent in the third quarter of fiscal 1997, as compared to 38 percent in the third quarter last year. The results for the quarter also benefited from a slight increase over the second quarter in average selling price for the 16-megabit DRAM, the company said.
The company's subsidiary Micron Electronics (MUEI) also reported earnings today.
Micron Electronics' net income for its third quarter, ending May 29, was $19.7 million, or 20 cents per share, compared to net income of $14.1 million, or 15 cents per share for the same quarter last year. Analysts were expecting 18 cents a share, according to First Call.
Revenue grew to $511.4 million from $412.3 million last year.