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Micron logs wide 1Q loss
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December 18, 2001: 6:39 p.m. ET
Memory-chip maker's results worse than Wall Street expected.
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NEW YORK (CNN/Money) - Micron Technology logged a fiscal first-quarter loss Tuesday that was wider than expected on weaker sales.
And executives of the No. 2 maker of computer memory chips gave mixed signals about the current quarter, but they did not provide specific financial forecasts.
After the close of trading, Micron (MU: up $1.11 to $31.81, Research, Estimates) said it lost $266 million, or 44 cents per share, during the quarter ended Nov. 29. That compares with a net profit of $360 million, or 59 cents per share, during the same period last year, and was a nickel per share more than the 39 cents per share analysts generally had expected the company to lose, according to a survey conducted by First Call.
At $424 million, Micron's first-quarter sales fell 73 percent from $1.58 billion during the year-ago quarter and fell below the $470.5 million it logged in the fiscal fourth-quarter.
Wall Street generally had been expecting revenue to come in at roughly $471.2 million, according to the First Call survey.
Estimates for Micron's quarterly loss ran from a loss of 75 cents per share to a loss of 26 cents per share
Micron is a top supplier of dynamic random access memory, or DRAM, chips, which are among the most abundant components sold in the electronics industry. Pricing in the DRAM business is extremely volatile, sometimes wildly fluctuating within short periods of time, which typically makes for a wide range of analyst estimates.
Over the past year, the semiconductor industry has been hurt by an excess of unsold inventory, with the DRAM segment being among the hardest hit as declining prices led to huge quarterly losses.
During the first-quarter, Micron recorded inventory write-downs of $173 million, while average selling prices for the company's memory chips fell 24 percent from the fourth quarter and were 88 percent below their levels in the year-ago period.
At the same time, Michael Sadler, Micron's vice president of sales, said there was a "significant uptick" in demand during the latter half of the first quarter and improving prices which, is the typical seasonal pattern. Demand for chips historically has increased during the holiday season as sales of PCs and other electronics increase.
Stadler also pointed out that the company had taken orders for memory chips used in wireless handsets, which had virtually dried up in recent months.
At the same time, Micron executives cautioned that demand is likely to drop off following the holiday season, and they did not provide any specific financial targets for the current quarter, which ends in February.
Wall Street currently is anticipating a loss of 30 cents per share on roughly $508.2 million in sales.
They also provided only scant details about a deal they struck with Japan's Toshiba earlier Tuesday, which observers say could mark a substantial shift in the DRAM industry's dynamics.
Toshiba is exiting the DRAM business and agreed to sell its U.S. manufacturing plant to Micron. Additionally, Steve Appleton, Micron's CEO, said the company remains in negotiations for a possible purchase of South Korea's Hynix Semiconductor.
Such consolidation would enable Micron to reduce the output of chips into the marketplace and ease some of the pricing pressure in the industry as it burns off the remaining inventories.
Appleton said the company expects to ink that deal by the end of February, until which time the specific terms will remain confidential.
In addition to giving Micron more control of the flow of DRAM into the marketplace and stabilize falling prices, Appleton said the proposed deal with Toshiba has other strategic importance.
"It does include significant resources in Japan to assist Micron with further penetration in that market," he said.
Although the terms have not yet been released, Lehman Brothers analyst Dan Niles told Reuters Tuesday he estimates Micron's price for the Toshiba plant at less than $500 million. The cost of building a similarly-equipped facility from scratch would be roughly $2 billion, Niles said. 
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