Micron Posts $313 Million Loss

The memory maker was forced to write down inventory during the most recent quarter.
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Updated from 5:46 p.m. ET

Memory maker

Micron Technology

(MU) - Get Report

Thursday posted a fiscal third-quarter loss from operations of 50 cents a share, which included a charge to write down its inventory.

The company said the loss totaled $313 million, including the $260 million inventory writedown. Some analysts had foreseen the charge but expected it to be larger. For instance,

Merrill Lynch

was projecting a $300 million to $400 million writedown.

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On a per-share basis, the charge totaled about 40 cents, according to the company, meaning that Micron's results came in better than Wall Street expected because analysts exclude most charges in their estimates.

According to

Thomson Financial/First Call

, analysts had expected a loss of 15 cents a share for the third quarter, which ended May 31. The consensus estimate had been getting progressively worse, and some analysts forecast even poorer numbers.

On Monday, Merrill said it expected the company to post a loss of 27 cents a share. (Merrill hasn't done underwriting for Micron.) In the year-ago quarter, the company earned 50 cents a share from continuing operations.

But the company's less-than-expected loss didn't mean its results were encouraging. After all, revenue came in at $818.3 million during the most recent period, nearly half of the $1.55 billion recorded during the same quarter a year ago.

Micron is a large maker of DRAM, or dynamic random access memory, and flash memory, which is memory that can hold data without power. Both markets have been hit by lousy demand and high inventories, which has eroded prices and socked profit margins. Weakness in the personal computer market has hurt the DRAM market and the slowing growth in cell phones has weighed heavily on the flash sector.

Given Micron's ties to the chip and PC markets, its results are watched for clues about the direction of both sectors.

During a conference call, Micron Chief Financial Officer Bill Stover said that the average selling price for 128-megabit DRAM had fallen to $3.60 in the third quarter from $4.50 in the second quarter. Current prices are about $3, down from about $12 in the fall. Micron had to write down the value of memory on its balance sheet to reflect those price erosions. The company now values the memory at prices it believes it can sell it at sometime in the near future.

And the company said during the call that it's still fighting high inventories in both the personal computer and telecommunications sectors. In recent weeks it has increased unit shipments, but it said the demand was coming mainly from the spot market rather than any large manufacturers. Indeed, the communications sector was so weak during the most recent quarter that Micron said it contributed virtually nothing to revenue compared with the 10% to 20% it usually accounts for.

Micron executives didn't provide an outlook for the fiscal fourth quarter, as is customary for the company, and said visibility remains poor.