UPDATE 2-Micron 'optimistic' Elpida deal will close in current quarter

Wed Jun 19, 2013 6:23pm EDT

* Third-quarter earnings $0.04/share vs est $0.02

* Revenue $2.32 bln vs est $2.25 bln

* Average selling prices of DRAM chips rise 16 pct

By Sruthi Ramakrishnan

June 19 (Reuters) - Micron Inc reported a better-than-expected quarterly profit as prices for its memory chips rose, and said it was "optimistic" that its acquisition of bankrupt Japanese chipmaker Elpida Memory Inc would close in the current quarter.

Micron would defer some capital spending in the first half of its fiscal year ending August 2014 following the completion of the deal, Chief Financial Officer Ronald Foster said on a conference call with analysts.

"We expect to pick up this spending in 2014 as we integrate the two companies," he said.

The company previously expected the deal to close in the first half of this year.

Micron's acquisition of Elpida, proposed in July last year, moved closer to completion after a key deadline for U.S. creditors to raise objections passed without a legal challenge earlier this month.

Acquisition of Elpida, the last of Japan's dynamic random access memory (DRAM) chipmakers, will create economies of scale and the combined company will rank second only to Samsung Electronics in the memory chip market.

HIGHER DRAM PRICING

Micron said average selling prices of its DRAM chips is estimated to rise in the mid to high single digits in the current quarter. They rose 16 percent in the third quarter.

"The DRAM supply and demand balance remains favorable ... we believe the situation will remain for the second half of calendar year 2013," Chief Executive Mark Durcan said on the conference call.

DRAM chips, mostly used in PCs, accounted for 39 percent of the company's revenue last year.

Memory chip supply constraints have driven up prices this year, with DRAM prices more than doubling, Jefferies & Co analysts said in a pre-earnings note.

Chip suppliers are converting capacity to supply DRAM for mobile handsets as demand for such chips from PC makers is declining, Pacific Crest Securities analyst Monika Garg said.

Analysts said Micron is also likely to benefit from increased focus on lower cost notebooks by Intel Corp, Microsoft Inc and PC manufacturers.

Micron reported a net profit - its first in eight quarters - of $43 million, or 4 cents per share, in the third quarter, compared with a loss of $320 million, or 32 cents per share, a year earlier.

Revenue rose 7 percent to $2.32 billion.

Analysts on average had expected a profit of 2 cents per share on revenue of $2.25 billion, according to Thomson Reuters I/B/E/S.

Micron's shares closed at $13.97 on the Nasdaq on Wednesday. They have more than doubled in value over the last six months.

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