Micron Second-Quarter Sales, Profit Top Analysts’ Estimates

Micron Technology Inc. (MU), the largest U.S. maker of computer-memory chips, posted second-quarter sales and profit that beat analysts’ estimates on increasing demand for chips used to store data on mobile phones and tablets.

Revenue climbed 15 percent to $2.26 billion in the period that ended March 3, Boise, Idaho-based Micron said today in a statement. That compared with $2.1 billion, the average of predictions compiled by Bloomberg.

After an industry slump, memory-chip prices may rebound as interruptions from Japanese suppliers affected by the March 11 earthquake restrict supply, said Doug Freedman, an analyst at Gleacher & Co. Sales of Nand flash chips, used in digital cameras and portable devices such as Apple Inc.’s iPhone and iPad, grew from the first quarter, offsetting a price decline.

“This quarter is, if not the bottom, then very close to the bottom” for demand, said San Francisco-based Freedman, who recommends buying the shares and doesn’t own any. “What you need for these guys to make money is a slowing rate of decline.”

Micron rose as much as 5.7 percent to $11.22 in late trading, after gaining 26 cents to $10.61 on the Nasdaq Stock Market. The shares have climbed 32 percent this year.

Net income fell 80 percent to $72 million, or 7 cents a share, from $365 million, or 39 cents, a year earlier, the company said. Analysts on average projected per-share profit of 6 cents.

Nand Sales

Nand flash sales increased 8 percent in the second quarter from the preceding three months because of increasing shipments. That helped cushion a 4 percent decline in average selling prices, the company said.

The company is the only remaining U.S.-based maker of dynamic random access memory, or DRAM, chips, which are used in personal computers and servers. The average price of DRAM fell 23 percent from the first period, leading to a 6 percent decline in sales, Micron said.

“The downturn bottomed this quarter,” Chief Executive Officer Steve Appleton said on a conference call after the results were released. “The demand signals from the majority of our customers are improving.”

Appleton said some of Micron’s suppliers in Japan were affected by the earthquake and tsunami, which shut down some power and transportation systems in the country. It will take Micron about two weeks to assess the impact on its business, he said.

Micron had reported an annual profit in only four of the past 10 years. The memory industry suffers from unpredictable swings in demand, making it hard to adjust production levels quickly enough. The company goes head-to-head with South Korea’s Samsung Electronics Co., the world’s second-largest chipmaker behind Intel Corp.

(The company began a conference call to discuss the results beginning at 4:30 p.m. New York time. Call +1-973-890-8355 and give the pass code 52960648 to listen.)

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.