Micron Beats by a Nickel

Updated from 4:44 p.m. EST

After back-to-back misses, Micron Technology(MU) finally came through with an upside surprise.

The Boise, Idaho-based chipmaker said Thursday that it boosted its profit by 200% in its fiscal first quarter, besting Wall Street expectations by 5 cents.

The company said it experienced strong demand across all of its businesses during the quarter, as PC vendors bought more DRAM in anticipation of Microsoft's(MSFT) forthcoming Vista operating system, and as cell phone companies moved to higher-resolution image sensors in handset cameras.

The result was a sharp uptick in Micron's gross margins, which reached 31%, vs. 24% during the preceding quarter.

Investors who had beat the stock down in recent weeks expecting the worst quickly bid the company's shares up about 4%, or 53 cents, to $14.02 in extended trading.

"We are on the front edge of feeling the Vista impact and this will layer out throughout 2007," Worldwide Sales VP Mike Sadler said in a postearnings conference call, adding that he expects the average Vista PC to ship with 2 gigabytes of DRAM memory.

The average price of DRAM increased 15% quarter over quarter, said Micron executives, who acknowledged that they are not able to meet all the demand.

Micron has moved to diversify from the volatile commodity DRAM market. The company said that sales of CMOS image sensors -- the chips used in cell phone cameras -- and NAND flash each accounted for 15% of the $1.58 billion in total sales during the fiscal first quarter.