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Micron posts higher loss, but revenues rise

Micron Technology on June 20 reported a net loss of $320 million or 32 cents per diluted share for its fiscal third quarter ended May 31, compared to a loss of $282 million or 29 cents per share in the previous quarter and net income of $75 million or 7 cents a share in the third quarter of 2011.

Net sales totaled $2.2 billion in the third quarter of 2012, $2 billion in the previous quarter and $2.1 billion in the third quarter of 2012.

Micron beat analysts’ expectations for revenue in the recent quarter but posted a higher-than-anticipated loss. Analysts on average expected Micron to lose 20 cents a share on $2 billion in revenue, Yahoo Finance reported.

The memory market remains a little oversupplied but is working through excess inventory, said Jim Feldhan, president of Phoenix-based Semico Research. Average selling prices for Dynamic Random-Access Memory (DRAM) chips increased mildly since early in 2012, and customers are buying more higher-density, higher-priced chips, he said.

Electronics system sales have been reduced by concerns about European financial systems and some economic weakness in Asia, Feldhan said. Television sales were lower than expected in the first quarter, for example. Electronics sales should pick up in the less seasonal second half of the year, helped by anticipated higher sales of ultra-portable computing devices, he said.

Micron said that between the second and third quarters of 2012, DRAM revenues were 20 percent higher mainly due to a 12 percent increase in sales volume and a 7 percent increase in average selling prices. NAND Flash sales were slightly higher as decreased prices offset much of the increase in volume.

Improved margins from sales of DRAM and NOR Flash products were partially offset by declines in margins from NAND Flash sales, Micron said.

Chief Financial Officer Ron Foster, in a conference call with analysts, said the recent quarter’s results were dragged down by lower NAND margins, a charge for ending the Transform Solar joint venture in Nampa, and costs associated with restructuring Micron’s IM Flash venture with Intel Corp. Micron in April announced the restructuring of the joint venture, by which it would get a greater share of NAND Flash memory produced.

Chief Executive Officer Mark Durcan said Micron in the recent quarter performed well in manufacturing and sales, but still has room to improve on inventory. The revised IM Flash venture should help improve Micron’s inventory position, he said. The NAND market is improving after softening in the recent quarter, he said.

“We believe the memory markets have bottomed,” Durcan said.

Micron has exclusive right to negotiate for the bankrupt Elpida, a Japan-based company that Durcan said represents 15 to 20 percent of the memory market’s production capacity.

“We’re interested if it can be done under the right terms and conditions,” he said. Purchasing Elpida, if it could be done without unnecessary equity dilution or taking on too much debt, would improve Micron’s scale and operating efficiency, he said.

Feldhan of Semico Research said acquiring Elpida would give Micron better visibility and potential for market penetration in Japan, and more capacity at a good price. Elpida makes high-end products for the server market.

Micron stock closed at $6.12 June 20 compared to a one-year range from $3.97 to $9.16.

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