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Micron issues profit warning

Low DRAM prices blamed

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Micron Electronics has warned that earnings for the quarter will be below Wall Street estimates, blaming lower DRAM pricing for the dip. Gateway has also warned that its revenues will be half a billion dollars lower than previous estimates.

The company now expects revenues of between $385 million and $400 million for the quarter, and earnings per share between $.01 and $.04 when results are announced just before Christmas.

"The primary reason for the earnings shortfall was the recent downward trend in DRAM industry pricing," said James R. Stewart, Micron's CFO. "If DRAM pricing had held at last quarter's levels, we'd be looking at about $85 million more in sales." Stewart will provide revised estimates for the next quarter when Micron announces final results on 20 December.

PC sales are $30 million to $35 million lower than previously estimated due to slow consumer PC sales, which are impacting the company's VelocityNet direct sales business, which runs in association with major retailers. The company said that although VelocityNet has grown steadily since its launch in April, some retail partners have taken longer than expected to ramp up significant volumes.

Despite the warning, overall PC operating results should still be up from last quarter, as lower operating expenses will offset the impact of poor PC sales. ®

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