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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: DavidG who wrote (25692)	12/17/1997 10:25:00 PM
From: Tim McCormick	Respond to of 53903

Here's is what Kippy had to say to the Idaho Statesmam this afternoon- Micron Technology Inc.'s profits skidded to their lowest point in almost five years as computer chip prices continued their 27-month collapse. Even so, the company intends to stick by its strategy of hiring more workers to pump out chips, hoping its position as the world's lowest-cost producer will see it through what has turned out to be the longest price downturn in semiconductor history. On Monday, the company said it earned $9.6 million, or 4 cents a share, in its first fiscal quarter of 1998. Profits were down 53 percent from the same period of last year, when the company pulled in $20.6 million. The good news is that Micron managed a profit, given the fact that chip prices are still plummeting, said Dan Niles, an analyst at Robertson, Stephens & Co. in San Francisco. The bad news? "They'll lose money next quarter," Niles said. "The question is, how much?" Micron executives say it's difficult to say what's going to happen in the next few months. But they agree prices for the 16-megabit memory chip are indeed down. Chip prices dropped from just under $5 this fall to about $3 Monday, said Kipp Bedard, vice president for corporate affairs. By comparison, chips sold for about $14 in late 1995. "In one month, we saw an almost 30 percent price decline," Bedard said. "The good news is, it's hurting our competitors a lot more than it's hurting us," he said. Bedard said the most recent price slide occurred because South Korean chipmakers are flooding low-cost memory chips onto the world market. "Our competitors have to be so desperate for cash that they're just selling any inventory that they can at any price to raise (U.S.) dollars," he said. Boise-based Micron is Idaho's largest private employer, with more than 12,000 people on its payroll. The state was forced to make budget cutbacks two years ago when chip prices started dropping and Micron's corporate income tax payments fell, too. Chip prices have continued their downward spiral since September 1995. While the current downturn isn't the worst in memory - in 1985, chips sold for as little as 25 cents a piece, forcing Micron to lay off half its work force - it is the longest. Micron has responded by cutting its production costs and by pumping as many chips out of its Southeast Boise plant as it can. There are no plans to change that strategy. "All you can do at this point is drive production," Bedard said. Micron recently has added employees in Boise and is trying to hire "a couple hundred more," Bedard said. The company's revenues point to the result of that increased production. Sales totaled $954.6 million for the first quarter that ended Nov. 28. That's up 31 percent over the same period last year. In the meantime, Micron's stock has lost 62 percent of its value on Wall Street since its 52-week high on Aug. 7. The stock closed Monday at $22.50 a share, unchanged from Friday. Bedard said there are signs that the end of the market downturn is in sight. Chip companies must continually invest to keep pace with changing technology. And now Micron's competitors are starting to delay and cancel equipment orders, Bedard said. Korea's economic troubles also should make it difficult for its chipmakers to compete over the long-term. These companies are deep in debt, Bedard said. They also must leverage a devalued won against the U.S. dollar because most of their equipment is purchased from American companies. (Copyright 1997 The Idaho Statesman)