Micron expects lower sales

Price cuts and start-up costs lead to lower projected revenues for the PC maker.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
Personal computer maker Micron Electronics (MUEI) said yesterday that its third-quarter sales will be about ten percent below the previous three months, adding that its gross margins will slide by two to three percentage points.

Micron said recent price cuts on its PC systems and start-up costs for its international operations are eating into its margins. The company, which made its announcement after the market's close, nonetheless saw its stock finish the day down 22.4 percent at 18-5/8, down 5-3/8.

It had earlier seen its stock price climb as rumors circulated that it was in acquisition talks with Compaq Computer (CPQ). But last month, the company issued a statement discounting buyout rumors.

Revenues in the last four consecutive quarters have departed from Micron's previous run of steady growth. The company reported revenues of $510.3 million in the second quarter.

Meanwhile, its net profits of $27.8 million in the second quarter was up from the previous quarter.

In its third quarter a year ago, the company reported revenues of $412.3 million and profits of $14.1 million.