Micron Technology Reports Smaller-Than-Expected 4th-Quarter Loss
By Dean Takahashi, Staff Reporter of The Wall Street Journal
Micron Technology Inc. late Monday reported a smaller-than-expected
fiscal fourth-quarter loss, reflecting stabilizing prices for memory
chips.
The Boise, Idaho, semiconductor maker reported a net loss of $89.1
million, or 42 cents a diluted share, for the quarter ended Sept. 3,
compared with net income of $72.1 million, or 33 cents a diluted share,
a year earlier. Analysts expected the company to post a loss of 54 cents
a share. Revenue for the quarter was $692 million, down 27% from $946.2
million a year earlier.
Despite the growth and profitability problems, Micron executives were
upbeat in a conference call with analysts. They said prices for Micron's
mainstay product, 64-megabit dynamic random-access memory chips, had
stabilized during the past two months and the outlook for October was
stable. The company announced the results after stock markets closed.
Its shares fell 12.5 cents to $33.875 in New York Stock Exchange
composite trading.
During the past year, Micron reported that memory-chip prices fell
60%, compared with about 75% in the year-earlier period. The persistent
price weakness stemmed largely from a glut of memory-chip factories
coupled with slowdowns in demand in Asia.
Micron executives disclosed that the company has shifted ahead of
competitors to a new generation of manufacturing technology, with
circuitry just 0.21 micron in size, in a sign that the company may be
able to reduce its costs faster than rivals. They also noted demand for
memory, measured in the amount of storage capacity purchased, grew 63%
during the fiscal fourth quarter over the third period.
Analysts said it is too early to suggest the memory market has turned
around. "Internally, Micron is executing extraordinarily well, but the
environment has not warmed up much for memory-chip makers," said
Jonathan Joseph, analyst at NationsBanc Montgomery Securities in San
Francisco. "It's still tough."
Mr. Joseph said Asian rivals, including big manufacturers in South
Korea, appear to be a whole generation behind Micron in manufacturing
technology, putting Micron in a good position as the lowest-cost DRAM
producer for the future.
But the company's performance will depend on how well it executes its
acquisition of the memory division of Texas Instruments Inc., which
could vault Micron to one of the top three companies in DRAM market
share by year end. The deal is expected to close in October, a Micron
spokeswoman said.
Micron's stock rose during the past few days on rumors that Intel
Corp. would buy a minority stake in the firm. Both companies declined to
comment. Intel executives have said in the past it is strategically
important for their company to ensure there is enough memory capacity to
sustain the PC industry in years ahead.
For fiscal 1998, Micron had a loss of $234.7 million, or $1.10 a
diluted share, compared with net income of $332.2 million, or $1.55 a
share a year earlier. Sales were $3.01 billion, down from $3.51 billion
a year earlier. The 1998 results include a $38 million after-tax gain on
the sale of Micron's contract manufacturing subsidiary. |
