Micron Misses by a Mile

Updated from 6:19 p.m. EST

So much for a price spike in memory saving the day. The short-lived blip in double data rate memory, or DDR, chip prices this fall wasn't enough to help memory vendor Micron (MU Quote - Cramer on MU - Stock Picks), which once again slipped badly on quarterly earnings results, missing revenue estimates by 15%.

For the first quarter of fiscal year 2003, its net loss totaled $316 million, or 52 cents a share, calculated according to generally accepted accounting principles. Micron didn't break out a separate pro forma number, but on that basis, analysts had been gearing for a loss of 23 cents.

At $685 million, the company's sales were down 8% sequentially and were far short of the Wall Street estimate of $809 million.

In regular trading, Micron closed down 21 cents, or 1.6%, to $13.28. After hours, shares plummeted $3.52, or 27%, to $9.76.

In its last conference call in September, CEO Steve Appleton had said the outlook for the just-ended November quarter, which would typically see a holiday-related lift, was "typical to slightly muted." But as the revenue drop makes clear, that expectation was understated.

The company said its average selling price per megabit dropped 12% sequentially. Most of the drop was attributed to lower prices for synchronous DRAM chips, or SDRAM, which accounted for about 60% of sales. Micron said in a statement that a spike in prices for DDR in the quarter had helped mitigate some of that effect -- but in retrospect, it clearly wasn't enough.

The company also said it took a quarterly writedown of $91 million for flash, SDRAM and static random access memory, or SRAM, products.

On the conference call, one Street analyst politely locked horns with management in a discussion that underscores investors' growing concerns with Micron's losses. Deutsche Bank analyst Ben Lynch, who noted that Micron has been burning cash steadily for the last few quarters, asked management for more details on its prediction earlier in the call that that the cash-burn rate would decline going forward.

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