Micron Swings to a Loss

Overall gross margins dipped to 25% vs. 31% in the fiscal first quarter.

Megabit sales of all memory products increased roughly 35% sequentially.

Micron's business providing image sensors for camera phones -- the company's most profitable product line -- is also under pressure.

Micron said image sensor sales declined on both a unit and revenue basis in the second quarter due to a "reduced appetite" for the chips from cell phone handset makers, increased competition and the popularity of less expensive low-resolution camera phones.

Micron executives said they probably lost market share in the second quarter, and noted that the image sensor business would have trouble replicating the growth rates it has notched up in past years.

Image sensors accounted for a large chunk of Micron's inventory, which increased 16% sequentially to roughly $1.3 billion. And executives acknowledged that it might take the rest of the fiscal year before inventory levels for image sensors come back down to desirable levels.

While the company did not provide financial guidance for the current quarter -- in keeping with its standard practice -- Micron executives noted that prices for NAND flash and DRAM memory have begun to stabilize in recent days.

Analysts polled by Thomson Financial expect Micron to lose 4 cents a share in the current quarter on sales of $1.43 billion.