Micron Electronics falls after 1Q warning

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Micron Electronics shares fell 69 cents to a 52-week low of $4.63 Friday, one day after it said it will miss analysts' estimates by a wide margin in its first quarter.

The PC maker joins Gateway (NYSE: GTW) as the latest major PC vendors to warn of disappointing sales and earnings this quarter.

Company officials said it now expects to post sales of between $385 million to $400 million in the quarter and earnings of between 1 cent to 4 cents a share.

First Call Corp. consensus was expecting a profit of 11 cents a share in the quarter.

On Wednesday, Gateway warned that pathetic consumer PC sales would cripple its first-quarter sales and earnings.

Gateway now expects to post sales of around $2.55 billion, more than $500 million below analysts' estimates. It also said it will earn only 37 cents a share, before charges, well below the First Call Corp. consensus estimate of 62 cents a share.

Not surprisingly, Gateway shares plunged $10.50, or 36 percent, to a 52-week low of $19 Thursday.

Micron Electronics officials said slow holiday sales and falling DRAM prices were primarily responsible for the shortfall this quarter.

"The DRAM market is cyclical in nature, and there are certainly challenges in the PC business," said CEO Joel Kocher in a prepared release. "But the results for HostPro appear on target, and we remain focused on executing our Internet-centric strategies."

Last quarter, Micron Electronics topped analysts' estimates when it returned a profit of $23 million, or 24 cents a share, on sales of $500 million.

The stock peaked at $20.69 in March.

Eight of the 11 analysts following the stock rate it either a "buy" or "strong buy."

Analysts were forecasting a profit of 63 cents a share in the fiscal year, a target that appears incredibly unlikely at this point.

Earlier Thursday, Lehman Brothers cut the stock from an "outperform" rating to "neutral."