Micron Technology Inc., the world's No. 2 maker of computer memory chips, on Tuesday beat Wall Street expectations in swinging to a net profit from a year-ago loss as a result of cost reductions and an increase in average selling prices.
For its fiscal first quarter ended Dec. 4, Micron posted net income of $1 million, or nil per share, compared with a net loss of $316 million, or 52 cents per share, a year earlier.
Sales for the quarter rose to $1.1 billion from $685 million a year ago, said the Boise, Idaho-based company, which is ranked second in the industry behind Samsung Electronics Co. Ltd.
Analysts, on average, were expecting the company to post a net loss of 6 cents per share on sales of $1.04 billion, according to Reuters Research, a unit of Reuters Group Plc.
The operating income for the quarter included losses of $25 million from changes in currency exchange rates as a result of a weaker dollar and a $21 million benefit primarily from sales of equipment associated with restructuring activities, Micron said.
The company cited cost reductions, gains in manufacturing efficiencies and advances in process technology for boosting gross margin to 26 percent from 19 percent last quarter.
Sales were boosted by robust demand for computers, consumer electronic devices and network infrastructure devices, Michael Sadler, vice president of worldwide sales, said in a conference call with analysts.
"We are hearing from our customers about a strengthening corporate environment in the PC area," he added.
"It was a nice Christmas present. They broke even," said Dan Scovel, an analyst at Needham & Co. "Market prices went up quarter to quarter, megabit growth went up so they're shipping more product, and they lowered costs."
Although prices of memory have dropped in recent weeks, the amount of memory that device manufacturers are putting into products is increasing to accommodate demand for advanced features in devices like cell phones and digital cameras, Sadler said.
Shares of Micron rose to $13.87 in after-hours trade from a close at $13.16 on the New York Stock Exchange.
The stock has risen 35 percent since the beginning of the year while the Philadelphia Stock Exchange semiconductor index has risen nearly 73 percent.
The chip industry is beginning to recover from its worst ever downturn that resulted from a cutback in corporate spending and the larger economic slump.
The Semiconductor Industry Association raised its outlook for 2003 and 2004 chip sales last month to growth of 15.8 percent and 19.4 percent, respectively, from growth estimates of 10.1 percent and 16.8 percent.
