SAN FRANCISCO -- Micron ( MU) reported a steeper-than-expected loss in its fiscal fourth quarter, as decreasing demand for memory chips and an inventory writedown battered its business.

And as the tech industry enters what is traditionally its strongest time of year, Micron executives signaled a grim Christmas sales season for all players in the PC business.

Asked about Micron's outlook for fourth-quarter PC sales during a conference call with analysts Wednesday, sales chief Mark Adams said the company expects overall PC growth to be flat to up a few percentage points year-over-year, instead of a previous expectation of roughly 10% growth.

The comments are among the most pointedly pessimistic views of holiday demand for PCs since the credit crunch reached crisis levels in recent weeks with the collapse of some of the world's major financial firms. Last month, Dell ( DELL) , the world's No.2 PC maker, said that "continued conservatism" in U.S. tech spending has spread to Western Europe and Asia, but did not offer a specific view on holiday demand.

Virtually all of the major firms involved in the PC industry, including Intel ( INTC) and Hewlett-Packard ( HPQ), are down significantly from their 52-week highs.

Shares of Micron were down 4.4%, or 19 cents at $4.11 in extended trading Wednesday.

For makers of memory chips like Micron, crumbling demand for PCs means an extra heap of misery on top of a market already plagued by a severe oversupply and plummeting prices for its products.

Micron posted a loss of $344 million, or 45 cents a share, in the three months ended Aug. 28 -- the company's seventh consecutive quarter of red ink.

The loss included a $205 million charge to write down the value of memory inventories to current market value, as well as a $70 million benefit due to price adjustments for NAND flash memory purchases in prior periods.

Excluding the charges, Micron would have lost 27 cents a share -- 3 cents worse than the average analyst expectation.

Micron had sales of $1.45 billion in the quarter, compared to $1.44 billion at this time last year, and short of the $1.54 billion expected by Wall Street, according to Thomson Reuters.

While Micron's chip revenue has been under pressure because of the falling prices for memory chips, the company noted that DRAM bit growth -- the amount of bits of memory shipped -- actually declined 5% in the recently ended quarter.

That's a particularly unwelcome trend, since it suggests that demand is declining even as prices come down.

Many PC makers have already taken advantage of rock-bottom memory prices and stocked up in recent months, says a report by DRAM exchange, a Taiwanese market research firm. And with expectations for near-term PC demand worsening, PC makers see little pressing need to order more memory.

Micron executives said that demand "dropped off" in the last month.

As it seeks to persevere through the current downturn, Micron said Wednesday that it would cut senior executive salaries by 20%, and trimmed its planned capital expenditures for the new fiscal year.

Instead of spending $1.5 billion to $2 billion boosting its production capacity, Micron said it will spend between $1 billion and $1.3 billion. The move follows similar cap-ex reductions by other memory makers in recent weeks.

Micron "is going to be better off than almost everyone else probably except Samsung. They are doing a decent job," says American Technology Research analyst Doug Freedman. "But if you ask me do I want to invest in this space, I would say no."

In recent weeks, Micron has been rumored to be in talks to acquire Qimonda ( QI), a struggling DRAM maker that many analysts believe could be out of business within a few quarters.

Micron executives did not comment on the Qimonda rumors, but reiterated previous comments that the DRAM industry in ripe for consolidation and that Micron will evaluate opportunities to take part in the consolidation as they arise.