Smart Modular Profits Decline

SAN FRANCISCO -- Smart Modular Technologies(SMOD Quote) managed to slightly outpace Wall Street expectations, despite a battered DRAM memory market that pushed down the company's sales and profit by more than 20%.

The Fremont, Calif., company posted income of $11.5 million, or 18 cents a share, down from $14.6 million, or 23 cents a share at this time last year.

Smart Modular posted revenue of $175 million, vs. $237.2 million in the year-ago period.

Analysts polled by Thomson Financial were looking for EPS of 17 cents on sales of $171.5 million.

The company, which packages memory chips onto modules used in PCs and servers, said that falling DRAM prices are prompting customers to load up on computer memory.

"Our results this quarter were driven by increased unit volume across multiple end markets, in particular, high-end servers, industrial and storage," said CEO Iain MacKenzie in a statement.

"The recent decline in 1Gb component pricing is contributing to the doubling of server module densities," he said.

Shares of Smart Modular, which gained 3.9% in regular trading Wednesday, increased an additional 1.9%, or 16 cents, to $8.60 in extended trading following the announcement.

Smart Modular's financial results come a day before semiconductor memory maker Micron(MU Quote) is due to report its quarterly earnings. Investors have driven down Micron's shares roughly 30% in the last three months on concerns that the current glut of DRAM chips in the market will keep prices low for the foreseeable future.