Micron Posts 4th Straight Loss as Memory-Chip Prices Fall

Micron Technology Inc. (MU), the largest U.S. maker of computer memory, reported a fourth consecutive quarterly loss after prices fell for chips used to store data in phones and tablets, crimping sales.

The net loss was $320 million, or 32 cents a share, for the third quarter ended May 31, compared with profit of $75 million, or 7 cents, a year earlier, the Boise, Idaho-based company said yesterday in a statement. Sales rose 1.5 percent to $2.17 billion. Analysts projected a loss of 20 cents on revenue of $1.99 billion, the average of estimates compiled by Bloomberg.

Makers of smartphones and other mobile devices haven’t equipped their products with as much memory as had been predicted, nor are computer manufacturers turning to chips for main storage at rates that were forecast, according to a report this week by Doug Freedman, an analyst at RBC Capital Markets in San Francisco. The result has been a glut in the product category called Nand flash memory.

Prices may begin to increase this month or in July as the result of demand for chips for new models of devices, Freedman wrote. He rates Micron outperform, the equivalent of a buy recommendation.

“We see reason to be optimistic,” Micron President Mark Adams said in a telephone interview. “Pricing isn’t in a great place, but it’s an improved and more stable environment.”

Micron shares fell 7.8 percent to $5.65 at the close in New York. The stock has lost 10 percent this year.

Japan’s Elpida

The company said in May it was in talks to buy a Japanese competitor, Elpida Memory Inc., to gain more control of industry output because periods of oversupply make it difficult for Micron to deliver profits. Elpida, the last Japanese maker of computer-memory chips, sought bankruptcy protection in February after losses left it unable to pay debts.

“We don’t feel that it’s a deal where we are up against the wall and have to do it at all costs,” said Micron’s Adams. “Micron has always been very sensitive to balance-sheet preservation and we’ll continue with that goal in mind.”

Acquiring Elpida would double Micron’s share of the global market for dynamic random-access memory, the most widely used memory chips in personal computers, to about 24 percent, helping it compete against industry leader Samsung Electronics Co. An acquisition of Elpida, which has three factories, would give Micron access to customers it currently doesn’t supply, executives of the U.S. company said yesterday.

Micron Chief Executive Officer Mark Durcan told analysts yesterday that the company will only go ahead with a purchase if it doesn’t involve diluting stock or taking on too much interest-bearing debt.

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

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