Micron beats 4Q forecasts

Micron Technology Inc. (NYSE: MU) posted fourth quarter losses less than half of what analysts predicted.

In fiscal fourth quarter results released after market close Monday, the memory chip maker reported a net loss of $17 million, or 7 cents per share. First Call's survey of 21 analysts forecast a loss of 18 cents per share for the quarter ended Sept. 2.

Investors were expecting positive news. Shares of Micron gained 4 7/8 to 76 3/8 in regular trading prior to the quarterly report.

Fourth quarter revenue rose to $1.1 billion from $692.1 million in the year earlier period and $894 million in the third quarter, when Micron missed estimates by a wide margin as DRAM price declines caught analysts by surprise. Chip sales increased to $820.9 million, from $377.4 million in the fourth quarter of fiscal 1998, when the worldwide DRAM industry was still grappling with overcapacity issues. On a per megabit basis, sales rose 80 percent sequentially, although a "significant" portion of those sales were filled with existing inventory, rather than new production.

Lower average selling prices in the DRAM market helped drive Micron's margins to 23 percent, down slightly from the previous quarter. Average prices were 23 percent lower sequentially, although Micron was able to offset much of that with cost cuts.

Analysts expect Micron to rebound and post a first quarter profit. Banc of America Securities analyst Bill Whittington recently noted that demand is roaring in all major chip sectors, even as capacity has shrunk. Although Micron lost money in in the fourth quarter, the several weeks of the period saw higher DRAM prices.

For the full fiscal 1999, Micron lost $69 million, or 26 cents per share, on sales of $3.8 billion. Megabit sales rose 185 percent year-over-year, largely thanks to the addition of plants bought from Texas Instruments. Gross margin for the year shot up to 25 percent from 6 percent in fiscal 1998.

PC systems generated fourth quarter revenue of $269.6 million. Despite an 8 percent drop in prices, the PC systems group saw its gross margin for the quarter rise to 18 percent, compared to 16 percent in the third quarter.>