Micron Technology topped analyst estimates in its second
quarter. Shares of Micron traded at $45 in after-hours activity on the
Island ECN, following the release of quarterly results. Micron rose $1 to
$45.25 in Thursday's regular trading ahead of the news.
Micron had delayed results for
one week pending financial information from Micron Electronics, which is
majority owned by Micron Technology.
After market close Thursday, the memory chip manufacturing giant said its
continuing operations lost $4 million, or a penny per share, for the fiscal
second quarter ended March 1. First Call's survey of 20 analysts produced a
consensus forecast calling for a loss of 3 cents per share in its second
quarter.
Micron's continuing operations exclude the results of Micron Electronics'
PC business, which is being sold to a private investment firm. Micron
Electronics will focus exclusively on Web hosting after merging with
Interland.
Including the PC business, which is categorized as discontinued
operations, Micron Technology lost $88 million, or 15 cents per share.
Although the company beat the published consensus forecast, the
results came as little surprise to most observers. The company last week said its semiconductor
operations, which generate the vast majority of Micron Technology's revenue,
would be slightly profitable. However, the Web hosting business of Micron
Electronics lost about $4.1 million.
"I don't think there's a whole lot of incremental information here, other
than what was said last week," said Dan Scovel, analyst with Needham & Co.
Second-quarter revenue for Micron fell 32 percent to $1.07 billion from
$1.57 billion in the first quarter. Semiconductor sales declined 33 percent
sequentially. The average selling price for memory chips dropped 50 percent
during the quarter, as megabit shipments rose 33 percent.
Megabit production of dynamic RAM chips (DRAMs) is falling across the
industry, said Kipp Bedard, vice president of corporate affairs. During a
conference call with analysts, Micron executives reported that the company's
own megabit production during the second quarter increased in the high
single digits, on a percentage basis.
Micron said its inventories peaked five weeks ago and have been falling continuously ever since.
"Inventories are relatively low at DRAM manufacturers and in the
channel," said Eric Rothdeutsch, analyst with Robertson Stephens. "The
environment out there continues to be tough. PC demand is not getting any
worse, but it's not very strong."
Company executives did not predict earnings or revenue for the third
quarter. Micron rarely provides Wall Street specific financial forecasts,
because the DRAM pricing market is often unpredictable.
Analyst estimates reflect that uncertainty. First Call's estimates for
Micron's current quarter range from a loss of 21 cents per share to a profit
of 26 cents per share. Among 11 analysts polled by Zack's Research, five
predict that Micron third-quarter losses will range from a penny to 15
cents, while the remainder call for bottom-line results ranging from
break-even to a profit of 31 cents per share.
Although Micron saw DRAM prices on the spot market rise in the last
couple of weeks, that's not necessarily going to continue, analysts said.
DRAM prices should maintain their current level, Scovel said, because as
Micron shifts more production lines to newer types of RAM, the supply of
synchronous DRAM--still the most commonly used type of memory in PCs--will
decrease.
But the current quarter is also a slow period for PC sales historically,
Rothdeutsch said. "DRAM prices are now stabilized at these levels, but it's
not going any higher," he said. "I don't think there's any real uptick in
demand in this quarter."