Micron profit beats estimates as chip prices climb
(Reuters) - Micron Inc reported a better-than-expected quarterly profit due to higher prices for its memory chips used in personal computers, mobile handsets and tablet devices.
The company said average selling prices of its dynamic random access memory (DRAM) chips, mostly used in PCs and which accounted for 39 percent of revenue last year, rose 16 percent during the quarter.
Memory supply constraints have driven up prices this year, with DRAM prices more than doubling, Jefferies & Co analysts said in a pre-earnings note.
Prices are expected to remain stable or rise further through the year.
Chip suppliers are converting capacity to supply DRAMs for mobile handsets as demand for such chips for PCs is declining, Pacific Crest Securities analyst Monika Garg said.
Analysts said Micron is also likely to benefit from higher use of DRAM chips in mobile handsets from the fourth quarter and increased focus on lower cost notebooks by Intel Corp, Microsoft Inc and PC manufacturers.
Micron's proposed acquisition of bankrupt Japanese chipmaker Elpida Memory Inc moved closer to completion after a key deadline for U.S. creditors to raise objections passed without a legal challenge earlier this month.
The company 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.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sriraj Kalluvila)