Micron Technology shares fall after memory-chip firm posts loss
5:15 PM EDT April 5, 2007
SAN FRANCISCO (MarketWatch) -- Micron Technology Inc.'s shares fell more than 4% Thursday amid mixed reactions to the memory-chip maker's wider-than-anticipated second-quarter loss.
Micron shares fell 56 cents to close at $11.51, after the Boise, Idaho-based company said late Wednesday that it lost $52 million, or 7 cents a share, in the three months ended March 1, compared with a year-ago profit of $193 million, or 27 cents a share. Revenue rose to $1.43 billion, up 16% from the $1.2 billion generated a year earlier.
The performance was below the average forecasts of analysts polled by Thomson Financial. Micron had been expected to lose a penny a share on $1.46 billion in revenue.
The company makes memory chips known as DRAM and NAND flash used in personal computers, computer equipment and handheld electronic devices. It also makes image sensors used in camera phones and camcorders.
Analysts who follow Micron registered a variety of opinions about the company's results.
Goldman Sachs analyst James Covello cut his rating on Micron's stock to sell from neutral, saying Wall Street estimates and sentiment were too bullish. He also lowered his estimates for 2007 to a loss of 45 cents a share from a loss of 5 cents a share.
However, Citigroup analyst Glen Yeung lifted his price target on Micron shares to $17 from $15.50. Yeung said that there is evidence that DRAM pricing has gone up slightly in recent weeks, as customers have begun using up their past product inventories, and that prices should remain stable in the second half of the year.
Micron said it expects DRAM contract pricing to hit bottom in the next four to six weeks as PC manufacturers build inventories ahead of catalysts like Intel's Santa Rosa launch and the back-to-school selling season.
The company has been stung by falling prices for DRAM. Since the end of 2006, average spot prices for DRAM have fallen about 40%, and the company said its average selling prices of products fell 30% from a year ago. Micron's also faced softer demand for image sensors from phone makers. Image sensors are the company's highest-margin product, analysts pointed out.
Mike Sadler, Micron's vice president of worldwide sales, said DRAM and NAND prices have stabilized recently, helping to reduce inventories at some of its customers, which are starting to buy chips again.
Still, Sadler said on a conference call to discuss Micron's results, "It's too early for us to tell whether it's sustainable, but we're quite encouraged that things appear, anyway for the time being, to have bottomed out, and we've got everybody back in the taking mode again, which is quite encouraging."
The company didn't give third-quarter earnings or revenue forecasts but said it was upbeat about demand potential for the rest of the year.
Wall Street analysts estimate that Micron will lose 4 cents a share on $1.43 billion in sales for the quarter.
The last time I bought Micron, I lost money, but at other times I have made a little. Vista will create a large demand for DRAM. |
