Micron Technology's 3rd-Quarter Loss Isn't Seen Hurting Peers
NEW YORK -(Dow Jones)- Micron Technology Inc.'s wider-than-expected
third-quarter loss shouldn't drag down the semiconductor sector,
analysts said Tuesday.
Still, companies that provide equipment to the capital-intensive
semiconductor industry could continue to suffer from the decline in chip
prices.
Micron, of Boise, Idaho, makes dynamic random access memory, or DRAM,
chips. Since 1995, the price of these chips, which provide the desktop
memory to every personal computer, has fallen steadily as supply has
outpaced demand. Micron, analysts say, has a unique dependence on DRAMs.
The sector faces pricing pressure from overbuilt Asian manufacturers,
and a logjam of supply in PC makers' sales channels has undercut demand,
making a tough market even tougher.
These problems came to a head in Micron's fiscal third quarter.
The company lost 41 cents a share before a one-time gain, its first
quarter in the red in seven years. Analysts had expected a loss of 18
cents. A year ago, the company had net income of 68 cents a share,
including a gain.
Nevertheless, some analysts were sanguine about Micron's prospects.
"Micron is in DRAM for the long haul," said analyst Lawrence Borgman
of Josephthal & Co. "They're good at it. They're not doing anything
stupid. It's just the market has too much supply at the moment."
Borgman added that dropping PC prices could spur unit sales, helping
Micron and other makers of computer memory products.
On the other hand, Gruntal & Co.'s Mona Eraiba said, trying to
forecast equilibrium in the chip market is like trying to hit a moving
target. New chip makers enter the industry, and existing companies get
better.
Borgman agreed that forecasting a balance between supply and demand
is difficult. He said the market won't reach equilibrium before the
fourth quarter of calendar 1998. |
