Updated from 5:23 p.m. EDT
posted an unexpected profit during its fourth quarter due to strong DRAM chip demand and image sensor sales.
"We're right in the middle of what we expected would be a seasonally strong demand period," said Mike Sadler, Micron's vice president of sales. "Things are playing out as we expected."
Shares of Micron jumped almost 6% in after-hours trading to $12.90 on Instinet.
Micron earned $43 million, or 7 cents a share, on sales of $1.26 billion. During the same quarter last year, the memory chipmaker earned $93.5 million, or 14 cents a share, on sales of $1.19 billion.
While that was a shrinking of profit, analysts had expected a loss of 8 cents a share on sales of $1.17 billion, on average, according to Thomson First Call. The bottom-line estimates ranged from a loss of 20 cents a share to earnings of 4 cents a share. This wide range, typical for Micron, is due to the significant and often unpredictable fluctuations of DRAM prices.
Micron's average sales price for its DRAM chips increased 3% sequentially for the quarter, and sales based on DRAM megabits increased 10%. DRAM sales revenue rose 15% and image sensor sales increased 40%. Noncommodity DRAM products, which generally command higher prices and better margins, accounted for 30% of total sales.
Overall, Micron said megabit production increased 15% sequentially, compared with an earlier expectation for high-single digit bit production growth.
The fourth-quarter performance marked a significant improvement for the Boise, Idaho-based company from
its third quarter. Then, the company logged a 30% drop in memory prices that ranked among its most severe ever. This price drop torpedoed gross margins to 8.2%. For the fourth quarter, margins jumped back up to a more-typical level of 22.4%.
Micron executives said late Thursday that current DRAM demand "feels pretty good."
Also, Micron became one of the first chipmakers to announce its capital-expenditure budgets for 2006. The company said it expects to spend between $1 billion and $1.5 billion in the coming 12 months compared with the $1.3 billion it spent in 2005.