Memory chip price wars drove Micron Technology Inc. (NYSE: MU) far below consensus Wall Street estimates in the third quarter.
In fiscal third quarter results released after market close Wednesday, the Boise, Idaho-based maker of DRAM chips posted a net loss of $28 million, or 10 cents a share. First Call's survey of 21 analysts predicted break-even results for the quarter ended June 3.
Third quarter revenue of $864 million represented a gain of almost 41 percent year-over-year, but a 15.8 percent decline from the second quarter. The company blamed price declines for lower gross margins.
Prices for 64-bit synchronous DRAM chips dropped 27 percent from the second quarter. Over the same period, megabit production increased 17 percent, while the number of megabits sold rose just 8 percent.
The memory chip industry has been savaged by price pressures stemming from industry overcapacity for the last several quarters. Wednesday's disappointing news wasn't entirely unexpected; at least one analyst, Tad LaFountain of Needham & Co., last week predicted that Micron would report third quarter. LaFountain, who rates Micron an "avoid", said Micron has contributed to the memory chip industry's supply glut.
Shares of Micron retreated 1 5/16 to 43 15/16 in trading prior to the quarterly report. Of 22 analysts polled by Zack's Investment Research, eight maintain the equivalent of "hold" ratings on Micron, seven recommend the stock as a "moderate buy", six have "strong buy" advisories, and one has the equivalent of a "sell" rating.>