Micron results, margins beat Street view, shares up
SAN FRANCISCO (Reuters) - Micron Technology Inc (MU.O) delivered only its second quarterly profit in nearly three years as a recovering economy helped lift prices for its DRAM memory products well beyond Wall Street expectations.
Shares of the U.S. chipmaker, which have rallied nearly 25 percent in the seven weeks leading up to Wednesday's earnings report on signs of increased technology demand, rose more than 3 percent after falling about as much in the regular session.
Chipmakers are emerging from a bruising and protracted industrywide downturn. Analysts say pricing for memory chips has followed strong demand for personal computers since the holiday quarter, a potential boost for Micron as well as competitors Samsung Electronics Co Ltd (005930.KS) and Hynix Semiconductor Inc (000660.KS).
Micron's gross margin grew to 35 percent in the fiscal second quarter from 27 percent in the first quarter as manufacturing costs fell, the company said. Analysts on average had expected 27.5 percent, according to Thomson Reuters I/B/E/S.
Revenue from its DRAM memory products, which are used in computers, rose 24 percent over the same period due to a 17 percent increase in volume, and a 7 percent rise in average selling prices.
"What you're seeing is that companies have been surprised by how stable demand is, and I think there's a little bit of skepticism," said Think Equity analyst Vijay Rakesh. "It's good to be cautious."
Revenue from the company's NAND flash products, used in products such as smartphones and portable music devices, fell slightly, Micron said.
However, Micron President and Chief Operating Officer Mark Durcan foresaw strong demand for its NAND memory products with the increased popularity of 3G mobile phones, tablet computers such as Apple Inc's (AAPL.O) iPad, and new "solid state" hard-drives designed using NAND memory.
"We anticipate pretty strong demand for our NAND products for the foreseeable future, and we are confident enough about that to add NAND capacity," Durcan said. "They won't constrain our supply, but they may drive incremental demand."
The company said net income rose to $365 million, or 39 cents a share, in its fiscal quarter ended March 4, up from a loss of $763 million, or 99 cents a share, in the year-ago period.
Excluding items, Micron earned 39 cents a share, ahead of the average analyst estimate of 24 cents a share according to Thomson Reuters I/B/E/S.
Revenue rose to $1.96 billion from $993 million the previous year, above the Wall Street target of $1.83 billion.
The Boise, Idaho-based company's shares closed down 3.89 percent at $10.37 on Nasdaq, but recovered to $10.70 in extended trading.
(Reporting by Ian Sherr; Editing by Richard Chang)
- Tape emerges of Clinton discussing bin Laden day before 9/11 attack
- Gaza truce over, Israel soldier captured, 70 dead in Rafah shelling |
- Financial health: The four numbers to zero in on
- Ebola patient coming to U.S. as aid workers' health worsens
- Sierra Leone declares emergency as Ebola death toll hits 729 |