Micron Posts Net Income After Gain From Acquisition
Micron Technology Inc., the largest U.S. maker of computer-memory chips, posted a profit of $939 million on one-time accounting gains. The shares dropped as much as 5.9 percent in late trading.
Third-quarter net income was 92 cents a share, after a loss of $301 million, or 39 cents, a year earlier, Boise, Idaho-based Micron said today in a statement. Sales in the period ended June 3 doubled to $2.29 billion.
While Micron and its competitors are benefiting from stronger pricing after a two-year glut forced them to slash spending on new factories and sell some products at below cost. Still, last quarter’s performance was partly due to a non- recurring $488 million gain from an acquisition.
“Investor sentiment right now is very brittle,” said Alex Gauna, an analyst at JMP Securities LLC in San Francisco who has a “market perform” rating on Micron stock.
Micron fell as low as $9.43 in extended trading after the results were released. It had climbed 56 cents, or 5.9 percent, to $10.02 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have fallen 5.1 percent this year.
Micron makes dynamic random access memory, or DRAM, chips that provide the main memory in personal computers. The company also makes Nand flash memory chips used in portable music players like Apple Inc.’s iPod and in memory cards for digital cameras.
Sales of DRAM increased 10 percent in the period from the second quarter, buoyed by a 9 percent gain in average selling prices, the company said. The average selling price jumped 54 percent from a year earlier. Nand flash revenue rose 16 percent. The 21-percent increase in Nand sales volume was offset by a 4 percent drop in average selling prices.
Micron Chief Executive Officer Steve Appleton said in December that industry spending on new plants and equipment plunged to $4 billion in 2009 from $22 billion in 2007, showing how little chipmakers have invested in expanding production.
No new plants will come on line until next year, maintaining the balance between supply and demand, according to Hans Mosesmann, an analyst at Raymond James & Associates in New York.
While the dearth in new plants has held down output, Samsung Electronics Co., the largest maker of computer memory, increased its 2010 spending budget last month. The Suwon, South Korea-based company plans to invest 9 trillion won ($7.5 billion) in its memory-chip business, compared with an earlier budget of 5.5 trillion won.
Micron completed its purchase last month of Rolle, Switzerland-based Numonyx BV, which makes a different type of flash chips for mobile phones.
Micron has reported an annual profit in only four of the past 10 years. The memory industry suffers from unpredictable swings in demand, making it hard to adjust production levels quickly enough.
Analysts projected $2.11 billion in third-quarter sales, the average of estimates compiled by Bloomberg.
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