Micron posts $706 million loss on memory woes
Memory chipmaker Micron Technology posted its eighth-straight loss as it was hit by a steep drop-off in chip prices caused by global oversupply.
In the quarter ended December 4, 2008, the Boise, Idaho company posted a net loss of $706 million or 91 cents per diluted share, on net sales of $1.4 billion, down 8.7 percent. Analysts surveyed by Bloomberg had forecast a loss of 45 cents a share.
The 2009 fiscal first quarter results include a $369 million write-down of memory chip products, Micron said.
The largest U.S. manufacturer of memory chips said it saw steep drops in the average selling prices for its DRAM and NAND Flash memory products, which dove 34 percent and 24 percent respectively. DRAM is used as the main memory in PCs. Flash is used for storage in digital cameras, digiital music players, and solid-state drives.
As a result, sales of memory products fell 4 percent from the previous quarter due to "significant decreases in market selling prices for the company's products," Micron said. Sales, however, measured in gigabits, increased 35 percent for DRAM and 40 percent for NAND flash memory.
Micron Chief Executive Officer Steve Appleton also addressed the global memory chip production situation in the earnings conference call. "Most of the (memory chip) companies have announced in the neighborhood of 20 percent, 30 percent," he said referring to year-end production capacity cuts. Appleton cited Hynix, the second largest memory chip manufacturer, which is cutting capacity 30 percent.
"The rate at which capacity comes back online will be determined by what the demand profile is through the first half of '09," he said.
He added that chip production equipment vendors may face a dire 2009. "If you talk to the equipment guys, they will tell you that they may not have any business in '09 in certain categories."
Speaking to the possible bailout of the Taiwan memory chip industry, Appleton said that this money is not likely to increase capacity (i.e., increase supply) because most of the money would simply go for things like debt relief, not necessarily to build new capacity.
During the quarter, Micron announced plans to cut its global workforce 15 percent through 2010 and slashed NAND flash production at a joint venture with Intel by approximately 35,000 (200 millimeter) wafers per month.
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