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Micron loses 91 cents per diluted share, twice analysts prediction

NAND and DRAM makers are among the hardest hit in the technology sector with the slowing global economy. These manufacturers were already hurting due to an oversupply that had driven prices down across the market at times leading to sales price being more than the cost of production.

The largest DRAM and NAND maker in the U.S., Micron, announced this week that it had posted its eighth consecutive quarterly loss. The memory company posted a net loss of $706 million amounting to 91 cents per diluted share.

Analysts expected a loss, but according to a poll by Bloomberg, the average loss was expected to be in the area of 45 cents per share. Micron posted roughly twice the loss expected by many analysts. Micron pointed out that the loss included a $369 million write-down of memory chip products.

The company reports that sales of its memory products fell 4% from the previous quarter due to significant decreased in market selling prices. Average selling prices for Micron DRAM fell 34% while average prices for its NAND product fell 24%.

Micron CEO Steve Appleton talked about the global oversupply of NAND and DRAM in a conference call according to CNET News saying, "Most of the (memory chip) companies have announced (production cuts) in the neighborhood of 20 percent, 30 percent." Appleton says that how fast the production comes back online will depend on demand in the first half of 2009.

As hard hit as the NAND and DRAM manufacturers are, the builders of equipment that is used to produce NAND and DRAM may be worse off in 2009 than the actual makers of the product. CNET News reports that some of these equipment makers expect to see no business at all in certain sectors in 2009.

It is probably safe to assume that Micron will be forced to make further cutbacks moving into 2009. The company cut 15% of its workforce in October. Oddly, a few days after Micron cut its workforce; it spent $400 million to buy a stake in a DRAM fab.

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They did what?
By jonmcc33 on 12/24/2008 1:12:02 PM , Rating: 1
Wait, they let go of 15% of their work force and then days later put $400 million towards some fab? Who are the idiot executives making decisions for that company?

RE: They did what?
By Etsp on 12/24/2008 4:24:57 PM , Rating: 2
"Hmmm, the current cost of labor is too high, and we seem to have more employees than what would be most efficient. Also, if we do not continue to build new fabs, our company would remain stagnant and fall behind our competitors in terms of technological capabilities, thus damning our company to the low end, low margin , large transistor market, significantly cutting our revenue potential." Think that sums it up?

RE: They did what?
By stevty2889 on 12/24/2008 5:56:08 PM , Rating: 2
They laid of people who were working at a 200mm fab(which was not cost effective at all, working on NAND product from the joint venture with Intel. The fabs they "bought" are 300mm, part of a joint venture with Nanya for DRAM, which they get capacity for a small fraction of the cost that building a new fab would cost.

RE: They did what?
By etherreal on 12/25/2008 2:07:31 AM , Rating: 2
It was the absolute right decision to make. Micron is in the prime position to start buying up capacity cheap. When the market turns around, Micron will be one of the major players (still). The same cannot be said for Qimonda, Nanya, and many others.

RE: They did what?
By spluurfg on 12/26/2008 5:57:12 AM , Rating: 2
All depends on who learned their lessons from 01 and held a lot of cash on their balance sheets. Those who did will do well, and those who didn't will suffer.

RE: They did what?
By etherreal on 12/26/2008 10:52:38 PM , Rating: 2
According to the earnings reports, Micron still has over $1 Billion in cash and short term investments...I would put them in the "survival" category.

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads
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