Micron Technology Inc. (MU), the largest U.S. maker of memory chips, fell the most in six months after reporting a wider fiscal first-quarter loss as a slump in demand for personal computers led to a supply glut, weighing down prices.
The shares tumbled 7.1 percent to $6.31 at 9:49 a.m. in New York, after earlier declining 7.5 percent for the biggest intraday drop since June 21. Before today, the shares had risen more than 30 percent since touching a 52-week low on Oct. 24 on optimism that chip prices will rebound.
Computer-memory chip prices fell 11 percent on average from the prior quarter, Micron said. The drop came amid a projected decline in PC shipments for 2012, the first annual contraction in more than 10 years, according to IHS ISuppli. Makers of PCs, servers and network equipment had already accrued more chips than they needed and reduced new orders, according to Doug Freedman, an analyst at RBC Capital Markets.
The net loss for the period that ended Nov. 29 widened to $275 million, or 27 cents a share, from $187 million, or 19 cents, a year earlier, the Boise, Idaho-based company said yesterday in a filing. Revenue fell 12 percent to $1.83 billion. Analysts on average estimated a loss of 20 cents on sales of $2 billion, based on data compiled by Bloomberg.
Micron also makes Nand flash memory, chips that provide the storage in mobile devices such as smartphones and tablets. Industrywide production cuts in that kind of memory helped reverse a slide in Nand prices, which rose 5 percent on average from the fiscal fourth quarter. Even so, unit sales fell 9 percent, Micron said.
In July, Micron agreed to acquire bankrupt Elpida Memory Inc. for 200 billion yen ($2.37 billion). The transaction is aimed at grabbing control of more supply and bolstering a challenge to industry leader Samsung Electronics Co., as well as South Korea’s SK Hynix Inc. Elpida, the last Japanese maker of computer-memory chips, sought bankruptcy protection in February after losses left it unable to pay debts.
The Japan Fair Trade Commission has approved the acquisition, according to a statement today from Micron and Elpida. The transaction has also cleared reviews in the U.S., Czech Republic and Korea, according to the statement.
The deal still needs to win approval from Elpida creditors, the Tokyo District Court, as well as regulatory nods in other countries, the companies said. It is expected to be completed in the first half of 2013.
Analysts, including Freedman, expect a manufacturing slowdown in the memory industry next year to help restore the balance between supply and demand and return Micron to profitability.
Micron has reported losses for six straight quarters, and analysts project that will continue for two more quarters, according the average of estimates compiled by Bloomberg.
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