Micron Posts Strong Q3 Profit, Says European Woes No Problem
Micron Technology reported its best net profit in years on Monday as sales of DRAM and NAND flash memory chips soared.
The memory chip maker also allayed fears that debt woes in Greece, Spain and other European countries might hurt demand for technology products this year.
"We've actually seen some pockets of strength in retail in Europe," said Mark Adams, Micron's vice president of worldwide sales, during a conference call with investors. "Certainly there have been some questions about Greece and other smaller markets, but on the margin, it's been okay. We haven't seen a dramatic shift."
He noted stronger sales in other regions of the world as well.
"The other side of that equation is China retail has been up dramatically, so on a global footprint, whatever noise there might be in some smaller regions in Europe is more than offset by some other global [areas] around China and India and others," he added.
Micron's sales of NAND flash memory, used to store songs, pictures and other data in iPhones, iPads and other devices, rose 16 percent compared to the previous quarter, while DRAM sales rose 10 percent in part due to higher prices for the chips. Tight supplies of DRAM globally have helped keep prices up over the past few quarters.
The company reported a net profit of US$939 million, or $0.92 per diluted share, compared to a net loss of $301 million during the same period last year. A survey of analysts by Thomson Reuters forecast the company's earnings per share at $0.43.
Micron's sales rose to $2.29 billion in its fiscal third quarter, which ended June 3, more than double the $1.11 billion from a year ago.
Although Micron's results handily beat analysts estimates, its shares fell 6 percent in after-market trading.
Investment bank Credit Suisse said investors may be worried about a lack of capacity at Micron as it enters its strongest selling season. Micron executives said production growth would be flat to slightly higher this quarter, compared to the third quarter.
The company also raised its capital spending target to the high end of its $850 million to $950 million estimated range for this year as chip demand remains strong.
Micron executives noted particularly strong demand for DRAM from networking and server customers, and said they expect demand for NAND flash memory to remain strong for the rest of this year
Earlier this month, the Semiconductor Industry Association raised its worldwide chip sales forecast to 28.4 percent growth this year to $290.5 billion, due to healthy demand among all technology product segments, followed by 6.3 percent growth in 2011 to $308.7 billion.