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Micron nets big loss

Inventory writedown

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Micron Technology, the American DRAM maker, has produced a whopping net loss of $576m for its Q4, with plunging memory prices largely to blame for the deficit.

A large amount of the loss - $466 million - comes through the company's decision to write down its inventory of works in progress and finished goods, reflecting the current reality of DRAM prices.

For the full year, ended August 30, 2001, Micron had a net loss from continuing operations of $521m (2000: $1,548m net income). Add in the writedown for the company's equity investment in Interland, formerly called Micron Electronics, and losses from the discontinued PC manufacturing business, and the net loss for the full year comes in a $625m.

By all accounts, Micron can make DRAM cheaper than anyone else. Its balance sheet is also better than most - it has $1.6bn in cash and liquid investments. It is better placed to climb out of the DRAM trough than its rivals.

Micron plans to press home this advantage with a capital spend of $1bn for fiscal year 2002. Steve Appleton, Micron's CEO, says the the "manufacturing implementation of 0.13µ process technology should position us very positively for 2002".

In the meantime, the memory business is not exactly a fun place to be.

Micron notes that average selling prices (ASPs) for its DRAM in the Q4, 2001 were 55 per cent lower than Q3, and 85 per cent down on Q4, 2000. This "precipitous drop in average selling prices" fed through to a 79 per cent fall in net sales in Q4,2001, compared with Q4, the previous year.

Micron mitigates some of the effects of lower ASPs by pumping out more units. Megabit shipments in fiscal 2001 were 50 per cent higher than in 2000. ®

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