* Q1 adj EPS $0.27 vs est $0.25
* Q1 rev $216.4 mln vs est $218.2 mln
* Sees Q2 adj EPS $0.09-$0.11 vs est $0.19
* Sees Q2 sales $165-$185 mln vs est $197.4 mln
* Shares down 10 pct after market
(Recasts, adds analyst comment, conference call details,
updates share movement)
By Siddharth Cavale
Dec 16 Memory chipmaker Smart Modular
Technologies SMOD.O said a continuing fall in the prices of
DRAM chips hurt first-quarter results and would pressure the
second quarter as well, sending its shares down 10 percent.
Growing supply of DRAM memory chips and stalled demand
growth have brought a quick end to the sector's one-year boom
and pressured the profits at top memory chipmaker's like
Samsung Electronics (005930.KS), Hynix Semiconductor
(000660.KS) and Elpida Memory 6665.T.
Smart Modular said prices of DRAM chips were decelerating
at 20-25 percent, hurting profits, especially in its key Brazil
markets that account for over half of its revenue.
Oppenheimer & Co analyst Gary Hsueh, however, believes that
if Smart Modular is able to better matchup incoming
DRAM-procured parts and outgoing module-selling parts, then it
could cushion it margins.
"Otherwise it is tough to see them get out of this
However, Smart Modular expects its enterprise solid state
storage and Brazil flash business initiatives to drive growth.
The market for solid state drives, which are faster and
more rugged than hard drives, is growing as data center
managers look for ways to retrieve information faster,
especially for applications like video streaming.
PRESSURES STILL REMAIN
Newark, California-based Smart Modular guided a second
quarter well below analyst expectations. It forecast adjusted
earnings of 9-11 cents a share, on revenue of $165-$185
Analysts on average were expecting earnings of 19 cents a
share, on revenue of $197.4 million, according to Thomson
Reuters I/B/E/S. [ID:nASA019PJ]
For September-November, net income was $8 million, or 12
cents a share, compared with $4.6 million or 7 cents a share,
last year. Excluding items, Smart earned 27 cents a share.
Revenue almost doubled to $216.4 million.
The company, whose rivals include Netlist Inc (NLST.O),
Sanmina-SCI (SANM.O) and Stec Inc STEC.O, said fewer business
days in the second quarter would also put pressure on results.
Shares of Smart Modular were down 69 cents in extended
trade, after closing at $6.37 on Thursday on Nasdaq. They have
risen 6 percent since the company posted fourth-quarter results
on Sep. 30.
(Reporting by Siddharth Cavale in Bangalore; Editing by Vyas
Mohan and Vinu Pilakkot)