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- Aug 23, 2007
10-3-07 11:06 AM EDT | E-mail Article | Print ArticleSAN FRANCISCO (Dow Jones) -- Micron Technology Inc. shares slid more than 7% early Wednesday amid concerns about an oversupply of memory chips and rising inventories.
"We continue to expect supply to outstrip demand in both DRAM and NAND," wrote Cowen & Co. analyst Betsy Van Hees, who reiterated her neutral rating on Micron shares.
Micron (MU) shares fell 86 cents to $10.93 in early trading.
Analysts said price declines for the DRAM and NAND should outweigh Micron's ability to lower its costs in producing the chips, hurting the company's gross profit margin.
On a bright note, Micron said its NAND unit did breakeven in the quarter for the first time due to lower manufacturing costs. Micron makes NAND through a joint venture with Intel Corp.
Late Tuesday, Micron said it swung to a quarterly net loss from a year ago as it continued to be dragged down by prices declines for its memory chips used in PCs and consumer electronics.
Micron reported a fiscal fourth-quarter loss of $158 million, or 21 cents a share. The results were affected by a $20 million write-down for some of the company's memory chips ready to be shipped or currently being manufactured. The earnings also included a $19 million restructuring charge.
In the same period last year, the Boise, Idaho-based company reported net income of $64 million, or 8 cents share.
For the three months ended Aug. 30, Micron reported sales of $1.4 billion vs. $1.37 billion a year ago.
Micron this year has been beaten up by weak prices for DRAM memory chips used in PCs. Spot market prices for DRAM have sunk about 75% so far this year, although spot prices did improve the past couple months. Micron generates about 50% of its total revenue from PC memory chips.
The company said average selling prices for its DRAM memory and NAND flash chips both fell 15% in the quarter since the end of May.
"We expect the oversupply situation to become exacerbated in the seasonally slow after-Christmas period, and thus expect ASP (average selling price) declines of the high mid-teens to outpace 10% DRAM cost reductions," wrote Douglas Reid, analyst at Thomas Weisel.
He introduced a 12-month stock price-target of $12.60.
ThinkEquity analyst Bobby Burleson downgraded Micron to accumulate from buy and cut his stock price-target to $13, from $18.
"We are not entirely convinced that demand for components going into PCs will remain robust," he wrote. "We therefore believe that investments in the PC food chain are becoming increasingly risky."
Tepid market conditions forced Micron to cut at least 5% of its global workforce, or 1,100 jobs, this past summer.
Micron said it continues to pursue opportunities to lower overhead costs and is more cost-efficient in making its products.
The company ended its fiscal year with a loss of $320 million.
(END) Dow Jones Newswires
10-03-071106ET
Copyright (c) 2007 Dow Jones & Company, Inc.
"We continue to expect supply to outstrip demand in both DRAM and NAND," wrote Cowen & Co. analyst Betsy Van Hees, who reiterated her neutral rating on Micron shares.
Micron (MU) shares fell 86 cents to $10.93 in early trading.
Analysts said price declines for the DRAM and NAND should outweigh Micron's ability to lower its costs in producing the chips, hurting the company's gross profit margin.
On a bright note, Micron said its NAND unit did breakeven in the quarter for the first time due to lower manufacturing costs. Micron makes NAND through a joint venture with Intel Corp.
Late Tuesday, Micron said it swung to a quarterly net loss from a year ago as it continued to be dragged down by prices declines for its memory chips used in PCs and consumer electronics.
Micron reported a fiscal fourth-quarter loss of $158 million, or 21 cents a share. The results were affected by a $20 million write-down for some of the company's memory chips ready to be shipped or currently being manufactured. The earnings also included a $19 million restructuring charge.
In the same period last year, the Boise, Idaho-based company reported net income of $64 million, or 8 cents share.
For the three months ended Aug. 30, Micron reported sales of $1.4 billion vs. $1.37 billion a year ago.
Micron this year has been beaten up by weak prices for DRAM memory chips used in PCs. Spot market prices for DRAM have sunk about 75% so far this year, although spot prices did improve the past couple months. Micron generates about 50% of its total revenue from PC memory chips.
The company said average selling prices for its DRAM memory and NAND flash chips both fell 15% in the quarter since the end of May.
"We expect the oversupply situation to become exacerbated in the seasonally slow after-Christmas period, and thus expect ASP (average selling price) declines of the high mid-teens to outpace 10% DRAM cost reductions," wrote Douglas Reid, analyst at Thomas Weisel.
He introduced a 12-month stock price-target of $12.60.
ThinkEquity analyst Bobby Burleson downgraded Micron to accumulate from buy and cut his stock price-target to $13, from $18.
"We are not entirely convinced that demand for components going into PCs will remain robust," he wrote. "We therefore believe that investments in the PC food chain are becoming increasingly risky."
Tepid market conditions forced Micron to cut at least 5% of its global workforce, or 1,100 jobs, this past summer.
Micron said it continues to pursue opportunities to lower overhead costs and is more cost-efficient in making its products.
The company ended its fiscal year with a loss of $320 million.
(END) Dow Jones Newswires
10-03-071106ET
Copyright (c) 2007 Dow Jones & Company, Inc.
