Alexa
  • Directory of Taiwan

Micron Technology shares tumble on lower profit

Micron Technology shares tumble on lower profit

Shares of Micron Technology Inc. tumbled Friday as the computer chipmaker reported lower-than-expected quarterly profit and some financial analysts said the higher costs of selling its flash-memory devices undermined its diversification strategy.
Micron began selling flash memory products 20 months ago, and earlier this year bought Lexar Media Inc. as it tries to free itself from dependence on the dynamic random access memory, or DRAM, market.
Fluctuating DRAM prices have hurt the company's sales and profit, but some analysts say the strategy has backfired because broadening its portfolio has left Micron less able to reap the benefits of a current DRAM recovery.
"What concerns us is that everything has gone right for Micron, and the company is still having difficulty generating much margin improvement," said Merrill Lynch analyst Joe Osha, who downgraded Micron to "Neutral" from "Buy, in a note to investors. "If Micron can't blow out earnings in an environment like this, when can it?"
Osha also said Micron appears willing to lose more money in its flash-memory business than he'd forecast. That's after the company's fourth-quarter selling and administrative expenses rose nearly two-thirds to $143 million (euro113 million), including $20 million (euro16 million) from Lexar alone.
Micron shares fell $2.40, or 14 percent, to $15.14 in trading Friday on the New York Stock Exchange, after reaching a 52-week high of $18.65 in September.
On Thursday, Boise-based Micron reported fourth-quarter profit of $63.5 million (euro50 million), or 8 cents per share.
While profit for the period rose 47 percent from the same period a year ago, it was far under the 14-cent-per-share estimate of analysts polled by Thomson Financial. Revenue of $1.37 billion (euro1.08 billion) also missed analyst expectations of $1.41 billion (euro1.11 billion).
For the fiscal year ended Aug. 31 the company's earnings more than doubled to $408 million (euro322 million), on sales of $5.3 billion (euro4.2 billion).
It is the third year in a row Micron has made money, the first time since 1997 the company has been profitable for three straight years, company spokesman Dan Francisco said.
"We're definitely committed to that strategy long-term," Francisco said, referring to Micron's push into flash memory as well as imaging products like those for camera phones.
"We recognize the strength of the DRAM market," he said. "The ability we've had to invest for success in the future has us set up nicely, with the focus on NAND, image sensors and DRAM."
Quarterly earnings were also dented by $45 million (euro35.5 million) in costs from legal settlements, Francisco said.
At the end of fiscal 2006, Micron had $3.1 billion (euro2.45 billion) in cash and short-term investments.


Updated : 2021-05-11 07:25 GMT+08:00