Micron Beats Earnings Estimates

Micron's(MU Quote) diversification efforts resulted in a larger-than-expected profit in its third quarter, although sales fell short of Wall Street expectations.

The Boise, Idaho, company said it earned $89 million, or 12 cents a share, in the three months ended June 1, with total sales of $1.31 billion.

The top line was shy of the average analysts' expectation of $1.37 billion in revenue, but Micron's EPS was higher than the 10-cent-a-share expectation, according to Thomson First Call.

Shares of Micron slipped 3.7%, or 59 cents, to $15.37 in extended trading.

The company attributed its profit upside to its continuing shift to higher-margin products than its traditional DRAM memory chip offerings used in personal computers. According to CEO Steven Appleton, the third quarter marked the first time that the majority of Micron's sales were comprised of products besides PC DRAM.

Sales of NAND flash memory represented 5% of total sales during the quarter, while imaging chips used in cell phone cameras made up 16% of overall sales.

The rising prices for DRAM also helped the bottom line. According to Micron, the average selling prices per megabit for DDR and DDR2 memory products increased 20%. Overall megabit DRAM sales however declined approximately 15% sequentially as production resources were shifted to flash and imaging chip production.

Micron's gross margin during the third quarter was 25%, compared with 19% in the second quarter.

In the year ago period, Micron had sales of $1.05 billion, with a loss of $128 million, or 20 cents a share.