First the bad news:

Micron

(MU) - Get Report

missed Street estimates, posting a 44-cents-a-share loss for the quarter ended Nov. 29, wider than the 41 cents analysts were expecting, according to Multex.com.

The supplier of DRAM memory chips posted $424 million in revenue, well short of the Street's $478 million projections in the first quarter of its fiscal 2002. In the year-ago quarter, Micron reaped $1.8 billion in revenue for a 58-cent-a-share profit.

As for good news, analysts recently have been calling a bottom for pummeled DRAM prices, something Micron management backed up on its earnings call. According to VP of Sales Mike Sadler, "in the latter half of October we saw a significant uptick in demand and by the first part of November this demand strength resulted in sharp spot market price increases. The robust demand environment has continued beyond the reporting period and today market prices are trending up in both the spot market and with OEM customers." Sadler added, however, that the "strength is not unexpected" because seasonally it was timed with "the typical high point of demand."

Micron's decline in average selling prices narrowed this quarter accordingly to 24% sequentially, a staggering 88% drop from the first quarter of fiscal 2001. In the third and fourth quarters, prices declined 35% and 55%, respectively. Last quarter, Micron had a narrower loss of 20 cents a share and used higher chip-shipment volumes to get to $480 million in earnings.

Micron continued to write off inventory in its first quarter of 2002, taking a $173 million charge, on top of the fourth quarter's $466 million charge and a $260 million writedown in the third quarter.

Micron announced this morning it would purchase

Toshiba's

DRAM subsidiary, Dominion Semiconductor, and the Japanese player will exit the harsh commodity memory chip business. Micron will acquire Toshiba's Manassas, Va., manufacturing facility.

CEO Steve Appleton reported from Japan that he expects the deal to close by the end of Micron's second quarter 2002, currently under way, and says it gives the company greater capabilities at a fraction of the cost it would take to build.

Two weeks ago, Micron acknowledged its high-profile involvement in talks with Korean DRAM maker

Hynix

to buy its operations. With Micron's Tuesday moves, onlookers wonder whether Micron still would be interested in swapping technology for financially troubled Hynix's DRAM assets. Similarly, Toshiba had been paired with Infineon in a potential agreement to sell its DRAM operations -- Micron potentially has quashed both deals at once.