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Micron edges 1Q forecasts
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December 20, 1999: 6:26 p.m. ET
PC maker beats Street despite drop in revenue; acquires Web hosting firm
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NEW YORK (CNNfn) - Micron Electronics Inc. Monday reported a fiscal first-quarter profit of $14.6 million, edging out Wall Street estimates despite a sharp decline in revenue.
For the quarter ended Dec. 2, the Nampa, Idaho-based PC maker recorded a profit of 15 cents a share. Analysts polled by First Call expected Micron (MUEI) to earn 14 cents a share in the quarter. Revenue dropped to $353 million.
Micron announced its results after markets closed.
In the year-ago period, Micron logged a profit of $11.7 million, or 12 cents a share, on $404 million in revenue.
Micron shares gained 1/4 to close at 12-3/8 prior to its earnings announcement. Its shares rose 1-3/8 to 13-3/4 in after-hours trade.
Sales of Micron’s core PC business declined to $259 million from $270 million in the year-ago period, while unit shipments declined 4 percent from fourth-quarter levels.
"During the past quarter we faced a number of challenges that impacted our PC business, including component supply shortages in the notebook business and aggressive pricing by competitors in the government sector," said Joel Kocher, Micron chairman and chief executive officer.
Kocher said notebook-component suppliers diverted shipments to Micron’s larger competitors amid a shortage of parts in the aftermath of the September earthquake in Taiwan. Analysts had expected second- and third-tier PC makers to feel most of the effects of the Taiwan earthquake, as computer component suppliers favored their biggest customers.
Boosting e-business
With its PC business stagnating, Micron has been rapidly moving into the Internet services business.
"We worked aggressively to bolster our e-services business through organic growth and acquisition,” Kocher said.
Micron reported $4.1 million in e-services revenue during the quarter.
After markets closed Monday, Micron acquired Web hosting firm Lightrealm Inc. Micron acquired all outstanding shares of the closely held firm for an undisclosed amount of cash.
In October, Micron announced a $210 million "subscriber computing” initiative, under which the company will offer low-cost or free PCs with a subscription to an Internet service provider. The strategy also allows customers to use software on a per-use basis, offering users "computing on demand.”
Micron Electronics is majority-owned by semiconductor firm Micron Technology Inc. (MU), which is scheduled to report its first-quarter results Wednesday. 
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Micron Electronics
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