Micron Technology Inc., the world's No. 2 maker of computer memory chips, on Wednesday posted a narrower quarterly loss on revenue that rose 26 percent, reflecting strengthening demand from computer makers.
Micron's quarterly sales fell short of Wall Street's more bullish expectations for a recovery in sales after leaner inventories kept it from reaping the full benefit of the turnaround in chip demand, analysts said.
Shares in the Boise, Idaho-based company, which have rallied strongly since mid-December, slipped about 4 percent in after-hours trade.
Micron, which typically does not forecast results for the current quarter or fiscal year because of the volatility of memory chip prices, said it expected average selling prices to increase in the current quarter.
The company posted a net loss for the second quarter, ended March 4, of $28 million, or 4 cents per share, compared with a net loss of $619 million, or $1.02 per share, a year earlier. Sales were $991 million, up from $785 million in the year-ago period.
Analysts, on average, had been expecting Micron to report a loss of 6 cents per share on sales of $1 billion.
Average selling prices were relatively flat compared with the prior and year-ago quarters, but there was stronger-than-expected demand for memory chips, Mike Sadler, vice president of worldwide sales, said in a conference call with analysts.
"There was a strong post-Christmas snap-back in the consumer desktop segment," he said.
Analysts expected that trend to continue in the current quarter as well.
"Average selling prices are projected to rise, which indicates better demand," said John Lau, an analyst at Banc of America Securities. "They said that they had people coming in within the last two weeks and selling out of all their product on higher demand."
However, the stock could trade lower in the short-term because the company's sales fell short of analyst expectations, said Dan Niles, managing director of Neuberger Berman, an asset management company owned by Lehman Brothers.
Micron did not have the excess inventory last quarter that it did in the prior quarter and also had one week less in the February quarter, he noted.
"They didn't have any inventory that they could (immediately) ship and that's why they missed the top line," even though prices for one of its key products, Dynamic Random Access Memory (DRAM), have risen steadily over the last month, Niles said.
"In the next quarter they should be able to be profitable after multiple years of losses," he said.
During the quarter, Micron received $450 million from Intel Corp., the world's largest maker of semiconductors, in exchange for rights to Micron stock, Micron said in its statement.
Under the agreement, Micron must reach certain levels of production of next-generation DRAM and transition to 300 millimeter wafer processing capacity and devote resources to advanced product development by May 2005.
If Micron fails to meet the objectives and its stock price is below Intel's purchase price, Micron could be obligated to pay Intel up to $135 million in cash or stock.
The chip industry is recovering from its worst-ever downturn that resulted from a cutback in corporate spending and the broader economic slump.
Shares of Micron were at $15.20 in after-hours trade after closing at $15.81 on the New York Stock Exchange. Stock in the company has gained more than 30 percent since bottoming out in mid-December.