Micron Swings To a Loss

Updated from 4:36 p.m. EST

SAN FRANCISCO -- Micron(MU Quote - Cramer on MU - Stock Picks) posted a wider-than-expected loss in its fiscal first quarter, as plunging memory prices and writedowns vaporized the company's profit margins.

And with brutal market conditions showing no signs of easing up, investors continued to abandon Micron shares. The stock dipped below its 52-week low in extended trading Thursday, falling 4% to $7.60.

Micron executives touted the company's progress cutting costs -- operating expenses were 18% of revenue in the recently ended quarter, vs. the 25% average during Micron's fiscal 2007 year.

"Obviously, the market has been under a lot of pressure from pricing, but in terms of the objectives that we set out to achieve on the operating expense side, we feel pretty good about it," CEO Steve Appleton said in a post-earnings conference call.

Appleton also suggested that the industry's aggressive expansion of manufacturing capacity, which has led to the current glut of DRAM memory chips, appears to be near its peak.

But company executives acknowledged that it was difficult to predict when the freefall in memory prices would stop, or even slow down.

The average price of DRAM chips fell 20% in the recently ended quarter, while NAND flash chips declined 30%, according to Micron.

As of Thursday, Micron executives said DRAM prices were on track to decline a further 10% to 15% in the current quarter, assuming no further price erosion, while NAND flash prices are already down 40%.

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