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Micron posts strong Q3 profit

Micron Technology

Micron Technology

Micron Technology Inc. on June 28 posted a quarterly profit as the company cited better prices for computer memory chips and a big accounting gain from an acquisition.

The results were announced after the market closed June 28.

The company earned $939 million, or 92 cents per share, in the three months ended June 3, which was Micron’s fiscal third quarter. That compares with a loss of $301 million, or 37 cents per share, in the year-ago period.

Analysts surveyed by Thomson Reuters expected net income of 43 cents per share. It wasn’t immediately clear if the analyst projections compared directly to Micron’s numbers.

Micron said it had $488 million in accounting gains in the latest quarter related to its acquisition of Swiss memory chip maker Numonyx, but didn’t provide a per-share number. Micron said its gross profit margin on memory products increased to 40 percent of revenue in the third quarter, versus 35 percent of revenue in the second quarter, in part because of an increase in average selling prices for its chips.

JMP Securities analyst Alex Gauna said customers upgrading their servers and notebook computers are leading to better-than-expected seasonal demand.

The company’s revenue more than doubled to $2.29 billion, from $1.11 billion in the year-ago quarter.

Micron shares fell 5.4 percent, or 54 cents, to $9.67 in extended trading, after the results were reported. They had risen 5.9 percent, or 56 cents, to close the regular trading session at $10.02.

The company’s results for the third quarter of fiscal 2010 include $488 million in purchase accounting gains relating to the Numonyx acquisition, $64 million in selling, general and administrative expenses relating to accruals for estimated settlements in the company’s indirect purchasers antitrust case and other matters and a $41 million benefit to cost of goods sold for price adjustments from suppliers of NAND products.

In the company’s Memory segment, revenue from sales of DRAM products increased 10 percent in the third quarter of fiscal 2010 compared to the second quarter of fiscal 2010 due to a 9 percent increase in average selling prices and a slight increase in unit sales volume. Revenue from sales of NAND Flash products was approximately 16 percent higher in the third quarter compared to the second quarter due to a 21 percent increase in unit sales volume, partially offset by a 4 percent decrease in average selling prices. The company’s gross margin on sales of memory products improved from 35 percent in the second quarter to 40 percent in the third quarter, primarily due to an overall increase in average selling prices and the benefit for price adjustments from suppliers of NAND products.

The company generated $889 million in cash from operating activities in the third quarter of fiscal 2010 and repaid $378 million of debt, a portion of which was repaid prior to its maturity. At the end of the third quarter, the company had cash and investments of more than $2.3 billion, an increase of $443 million compared to the end of the second quarter.

During the third quarter, in an all-stock transaction, the company completed its acquisition of Numonyx, a Swiss company which manufactures and sells NOR Flash, NAND Flash, DRAM and Phase Change non-volatile memory technologies and products.

In connection with the acquisition, the company issued approximately 138 million shares of Micron common stock to Numonyx shareholders and assumed all of the outstanding restricted stock units held by Numonyx employees. The fair value of the net assets acquired exceeded the fair value of the consideration paid by the company and, as a result, the company’s results of operations include a non-operating gain on the acquisition of Numonyx.

The Numonyx operations added approximately $80 million to consolidated net sales for the third quarter at a nominal margin due to the application of purchase accounting. Numonyx is reported as a separate reportable segment while the company identifies its reporting structure with the integration of Numonyx into


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