Micron misses estimates on weak chip sales
(Reuters) - Micron Technology Inc posted lower-than-expected quarterly results as weak PC sales continue to weigh on its chip business.
DRAM (dynamic random access memory) makers such as Micron are heavily dependent on the PC industry, which consumes close to 50 percent of the total output. They are now looking at mobile and server markets to lower their reliance on PC makers.
"I think for (DRAM) prices to stabilize we would have to see good demand pull through which we are not seeing. Looking at their quarter-to-date guidance, they probably would post losses for another couple of quarters," Pacific Crest Securities analyst Monika Garg told Reuters.
The company estimates average selling price for DRAM to be down high teens quarter-to-date from the prior period.
Micron President Mark Adams said there were no signs of production cuts or a drop in capital expenditures that would stabilize the DRAM market.
The company's planned acquisition of failed Japanese chipmaker Elpida Memory Inc for about $750 million in cash, raises its share in the DRAM market, next only to market leader Samsung Electronics.
Elpida's U.S. bondholders have been battling Micron's planned acquisition, saying the bankrupt Japanese chipmaker had carried out "unauthorized" dealings involving its U.S. assets.
Adams declined to comment on the matter, but said, "We do feel that we are in line for a successful outcome."
The company reported a net loss of $243 million, or 24 cents per share, for the quarter ended August, its fifth straight quarter of losses.
It had a fourth-quarter loss of $135 million, or 14 cents per share, a year earlier.
Sales for the company, which counts Intel Corp and Hewlett-Packard Co among its customers, fell to $1.96 billion from $2.14 billion a year ago.
Analysts on average were expecting a loss of 23 cents per share on revenue of $2.11 billion, according to Thomson Reuters I/B/E/S.
Sales of NAND chips fell 12 percent compared to the third quarter and those of DRAM chips declined 9 percent, the company said.
The company experienced difficult market conditions and lower average selling prices in the year, Chief Executive Mark Durcan said in a statement.
Last month, CEO Durcan told Reuters prices for NAND memory chips should firm early next year as industry production cuts help reduce supply.
Economic sluggishness in Europe and the United States and an oversupply of NAND chips, used by Apple Inc and other manufacturers of mobile devices, have hammered prices since last year and caused losses for Micron, which is the only major U.S. memory chipmaker.
The company's shares, which closed at $6.01 on Thursday on the Nasdaq, fell to $5.93 in extended trading.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sreejiraj Eluvangal and Anil D'Silva)
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