Qimonda Sees DRAM Demand - TheStreet

Qimonda Sees DRAM Demand

The memory chip maker's sales sink 24% and loss widens, but the company sees strong growth ahead.
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DRAM memory products maker

Qimonda

(QI)

late Tuesday swung to a third-quarter loss on waning DRAM prices and a weaker U.S. dollar that could not be offset by higher bit shipments.

Net loss for the quarter ended June 30 was 218 million euros ($301.5 million), or .64 euros (89 cents) a share. A year ago, the Germany-based company earned a profit of 54 million euros, or .17 euros (24 cents) a share.

Before taxes, the company lost 323 million euros ($446 million).

Qimonda said third-quarter revenue dropped to 740 million euros ($1.02 billion) from 977 million euros a year ago -- a slide of 24%.

Analysts at Thomson First Call forecast $1.12 billion in revenue.

Because of the steep price declines in the quarter for DRAM products, Qimonda, a unit of German chipmaker

Infineon

(IFX)

, took inventory write-downs of 66 million euros, affecting gross margin and profitability.

CEO Kin Wah Loh said that in the "June quarter, the industry saw a sharp price decline for standard DRAM products, where PC contract prices dropped almost 60% quarter over quarter."

He added that Qimonda expects to convert more than 50% of its capacities to 80 nanometer and 75 nanometer by the end of calendar year 2007, increase its 300-millimeter share to 80% and save "about 30 million euros compared to our previous plans" because of curtailed "operating expenses for the current financial year."

For the coming quarter, the company expects its bit production to grow by 15% to 20%, primarily attributable to increased "in-house and partner capacities and continued productivity improvements" from the ongoing conversion to 80-nm and 75-nm technologies.

The company targets a share of bit-shipments to non-PC applications of around 50% for the fourth quarter, and between 60% and 70% for the full year.

Shares of the company gained 17 cents to $16 in extended trading.