Micron's loss misses Street target

SAN FRANCISCO (Reuters) - U.S. chipmaker Micron Technology Inc MU.N posted a wider-than-expected quarterly loss as selling prices for its memory products continued to fall, sending its shares 2 percent lower on Thursday after an 11 percent rise during the regular session.

Micron makes dynamic random access memory, or DRAM, used as memory in computers, and flash memory used in digital music players such as Apple's (AAPL.O) iPod and cell phones.

Micron, like other memory manufacturers, has been stung by global oversupply and a bad economy that has resulted in a two-year decline in prices. As market prices for DRAM and flash memory have tanked, companies have struggled to cut costs.

The company's net loss in its fiscal second quarter ended March 5 narrowed to $751 million, or 97 cents a share, from $777 million, or $1.01 a share, in the year-ago quarter.

Excluding $120 million in restructuring and other items, Micron lost 82 cents a share. Wall Street analysts, on average, had been expecting a loss of 62 cents a share, according to Reuters Estimates.

Second-quarter revenue slid 27 percent to $993 million, missing Wall Street's target of $1.15 billion.

Revenue from sales of DRAM products fell 30 percent from the first quarter, as average selling prices dropped 30 percent. Flash memory revenue fell 20 percent as prices dropped 13 percent.

But prices for DRAM and flash memory seem to be recovering, Micron executives said in a conference call.

Avi Cohen, a managing partner with Avian Securities, warned that the uptick in prices might mirror mid-March 2008 when prices improved for six weeks before falling.

"We've seen spot prices come off a little already," Cohen said. "But a lot of players or former players are out of money. That's the good news, which means they can't upgrade facilities, and they can't extend bit growth."

Micron shares dipped Wednesday after government-funded chip maker Taiwan Memory Co (TMC) announced a partnership with Micron rival Elpida Memory Inc 6665.T. Micron itself is still exploring a potential partnership with TMC.

"We're still in discussions with the Taiwan government," said Micron CEO Steve Appleton, but the deal with Elpida is "not OK with us" and there is "no compelling reason yet in terms of benefits for Micron to participate."

Micron owns a large portion of Inotera (3474.TW), one of the two main chip manufacturers in Taiwan, Appleton added.

"There's nothing really that's that negative for Micron in the event that we aren't able to come to a formula that works for both us," he said.

Cohen thinks a deal with TMC would actually hurt Micron. Funding for both Elpida and Micron would add to the problem of oversupply.

"While it might be incrementally better for Micron because they're getting a royalty, they're actually worse on the pricing side of things for their own production," Cohen said.

Micron announced plans to cut 2,000 jobs, or 12 percent of its workforce, in February on top of a 15 percent cut in October. The cuts should be completed by the end of August, the company said.

Overall headcount is down 5 percent from the previous quarter to 20,794 employees.

Analysts say Micron must keep up with South Korean heavyweight Samsung Electronics Co Ltd (005930.KS). Doing this means controlling capital expenditures as well as investing in fabrication technologies that are cheaper and more efficient. A sustained rebound for the market means reducing oversupply and controlling investment.

Micron's stock has fallen roughly 30 percent from a year ago. The Boise, Idaho-based company's shares closed up 45 cents at $4.63 on the New York Stock Exchange.

(Reporting by Clare Baldwin and Gabriel Madway; Editing by Tim Dobbyn, Gunna Dickson, Leslie Gevirtz)