Micron Technology Inc., the U.S.’s largest maker of memory chips, delivered a gloomier fiscal third-quarter forecast Wednesday than analysts expected because of weaker demand for personal-computer components.
Revenue in the quarter ending in May will be $2.8 billion to $3.1 billion, the Boise company said. That will result in an adjusted loss of 5 cents a share to 12 cents a share, compared with average analysts’ estimates of a profit of 3 cents on sales of $3.18 billion.
Micron also reported a loss in its latest quarter, its first since 2013 as the continuing slump in demand for laptops forces down memory-chip prices. That’s disappointing for investors who had hoped the company’s efforts to consolidate the industry by buying up weaker or failing competitors would eliminate the worst of periodic supply gluts that have caused wide swings in its earnings.
Micron shares rose 1.3 percent in after-hours trading as the company reported it was able to cut the costs of production of NAND flash memory chips by 12 percent in the second quarter. That’s more than some investors had expected, according to Ian Ing, an analyst for MKM Partners Inc. That cost reduction compared with a 15 percent decline in prices in the quarter.
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Micron’s second-quarter loss excluding some items was $48 million, or 5 cents a share, compared with profit of $249 million or 24 cents a share, a year earlier. Analysts had estimated a loss of of 9 cents.
Revenue was $2.93 billion, compared with average analysts’ estimates of $3.05 billion.
The company is the last U.S. major manufacturer of DRAM, or dynamic random access memory, which is the main memory in computers and smartphones. It competes with South Korea’s Samsung Electronics Co. and SK Hynix Inc. Together, the three companies control more than 90 percent of the worldwide market after years of losses forced other suppliers out of the business.
Micron also makes NAND flash memory chips, used as storage in mobile devices and increasingly computers. Analysts say Micron has fallen behind its Korean rivals in the introduction of new production techniques in this area, hurting its profitability.
Micron’s management have been trying to reduce its dependence on commodity chips and move into more profitable areas like memory for servers and other specialist devices. It is also making solid-state drives, replacements for hard disk drives made of chips, as a more profitable outlet for its products.
“Although we continue to navigate challenging market conditions, we are on track with deploying our advanced DRAM and NAND technologies and improving our cost structure,” Micron CEO Mark Durcan said. “As a result, we expect to significantly improve our competitive position as we move through the second half of 2016 and beyond.”
Micron is the Treasure Valley’s largest for-profit employer, with about 6,000 employees. The company employs about 30,000 people worldwide.
The Idaho Statesman contributed.