(By Salman - iStockAnalyst Writer)
Micron Technology (NYSE: MU)
Micron Technology Inc engages in the manufacture and marketing of semiconductor devices worldwide. Its products include dynamic random access memory (DRAM) products, NAND flash memory products and complementary metal oxide semiconductor (or CMOS) image sensors..
Last week, Micron Technology Inc. reported better than expected quarterly earnings. Fiscal third-quarter loss totaled $290 million, or 36 cents a share, compared to a loss of $236 million, or 30 cents a share, during the same period a year ago. Operating loss narrowed to $246 million in the third quarter, compared with a loss of $708 million in the second quarter. Quarterly revenue decreased 26% to $1.1 billion from $1.5 billion in the prior year. Total sales in the third quarter increased 11% compared to the second quarter. Analysts on average were looking for a loss of 39 cents a share on revenue of $1.2 billion.
On a segmental basis, revenue from DRAM chip sales grew 14% sequentially because of an increase in sales volumes. Revenue from NAND flash-memory chip sales was flat sequentially while the sales volume climbed 20%. The average selling price increased for all customers except Intel Corp. (INTC), Micron's joint venture partner. The price to Intel was lower because of cost reductions in NAND production. Sales in Micron's imaging unit jumped 53% sequentially. Micron recorded a dramatic improvement in its gross margin. Micron's gross margin jumped in the third quarter to 9.7% from 3.2% on lower manufacturing costs. Cash flow from operating activities in the third quarter continued to remain positive at $151.0 million. The debt to capital ratio, both before and after the issuance during the quarter of the convertible notes and common shares, remained around the 30% range, significantly better than most of its rivals.
The company is aggressively cutting costs. During the quarter, selling, general and administrative costs declined to $80 million. The company expects those same expenses to be between $75 million and $80 million in the fourth quarter.
The company, which has suffered amid oversupply the market, continues to grow its market share. Already, smaller players like Qimonda and Spansion Inc. have declared bankruptcy, eliminating some of the competition. Its overall DRAM shipments grew 18% in bits shipped quarter-over-quarter while NAND shipments were up 21% from the previous quarter. Micron also stands to benefit from a shift in demand towards DDR3 memory for both server and PC applications. During the first three months of 2009, shipment of DDR3 product increased approximately 70% quarter-over-quarter and represented about 25% of the company's overall core DRAM sales. Micron is one of only a few suppliers of DDR3 memory.
There are also signs of recovery in DRAM market.
