DRAM price slump pitches Micron into the red

Not a good Q3

By Tony Smith • Get more from this author

Posted in IT Channel, 24th June 2005 09:00 GMT

Micron blamed falling DRAM prices for plunging into the red in Q3.

The US memory maker lost $128m (20 cents a share) for the quarter ended 2 June - doing much worse than analyst forecasts of two cents a share for the quarter. Wall Street's estimate was well below the $118m (17 cents a share) income Micron posted for the previous quarter and the $91m (13 cents a share) profit it announced this time last year.

Revenue for the quarter totalled $1.05bn, less than the $1.18bn Wall Street was expecting and the $1.31bn Micron made in Q2. During Q3 FY2004, it recorded sales of $1.17bn.

Micron said demand was strong, and the company had cut costs - memory production was eight per cent up thanks to improved production efficiencies - during the period. But these efforts counted for little against much-reduced average selling prices (ASPs) for commodity DRAM.

"ASPs for memory products decreased approximately 30 per cent comparing the third quarter of FY2005 to the immediately preceding quarter as excess supply depressed pricing particularly for mainstream PC memory," the company said.

While there are signs that the inventory correction that the chip industry as a whole has been facing since Q2 2004 is now coming to an end, it clearly hasn't come too soon for Micron. ®