Updated from 6:19 p.m. EST
So much for a price
spike in memory saving the day. The short-lived blip in double data rate memory, or DDR, chip prices this fall wasn't enough to help memory vendor
, which once again slipped badly on quarterly earnings results, missing revenue estimates by 15%.
For the first quarter of fiscal year 2003, its net loss totaled $316 million, or 52 cents a share, calculated according to generally accepted accounting principles. Micron didn't break out a separate pro forma number, but on that basis, analysts had been gearing for a loss of 23 cents.
At $685 million, the company's sales were down 8% sequentially and were far short of the Wall Street estimate of $809 million.
In regular trading, Micron closed down 21 cents, or 1.6%, to $13.28. After hours, shares plummeted $3.52, or 27%, to $9.76.
In its last conference call in September, CEO Steve Appleton had said the outlook for the just-ended November quarter, which would typically see a holiday-related lift, was "typical to slightly muted." But as the revenue drop makes clear, that expectation was understated.
The company said its average selling price per megabit dropped 12% sequentially. Most of the drop was attributed to lower prices for synchronous DRAM chips, or SDRAM, which accounted for about 60% of sales. Micron said in a statement that a spike in prices for DDR in the quarter had helped mitigate some of that effect -- but in retrospect, it clearly wasn't enough.
The company also said it took a quarterly writedown of $91 million for flash, SDRAM and static random access memory, or SRAM, products.
On the conference call, one Street analyst politely locked horns with management in a discussion that underscores investors' growing concerns with Micron's losses. Deutsche Bank analyst Ben Lynch, who noted that Micron has been burning cash steadily for the last few quarters, asked management for more details on its prediction earlier in the call that that the cash-burn rate would decline going forward.
Lynch, observing that the comment was presumably based on an improving outlook for average selling prices, asked what the company was expecting in the way of ASPs. "It's hard to feel comfortable, given that we're going into seasonal weakness in
calendar Q1, to really understand how the cash burn doesn't stay the same," he pointed out.
But the company flatly declined to give an ASP estimate, saying industry prices are too volatile to predict.
Also on the call, management reiterated that its capital expenditure in fiscal year 2003, now under way, will be between $800 million and $1.2 billion, as it said in September.
Adding to Micron's financial woes, market research outfit Gartner Dataquest reported today that No. 2 vendor Micron lost ground in the DRAM market in 2002. The company's market share slipped from 19.1% in 2001 to an estimated 17.2% this year.
Micron's performance compared unfavorably with that of
, which strengthened its No. 1 spot, increasing its share of the pie by 4 percentage points, to 31%.
Still more important, Samsung managed to make a profit throughout the year. By contrast, the last time Micron finished a quarter in the black was exactly two years ago, in its first quarter of fiscal 2001.
Gartner also said that in 2002, global DRAM revenue surged 37%, to $16.2 billion.