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PCs, servers push Micron to profits

Recovery from meltdown

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Micron bagged $365m in profits during its latest fiscal quarter, completely rebounding from a $763m loss this time last year.

In the quarter ended March 4, Micron's sales nearly doubled to $1.96bn, but costs were only up a smidgen. For the six months ended in March - which more or less encompasses the period of stabilization in the IT sector after the economic meltdown caused all sub-segments of the IT biz to freeze up - Micron's sales rose by 54.5 per cent to $3.7bn, and its net earnings came to $569m, a whole lot better than the $1.48bn loss the company booked in the first half of fiscal 2009. Micron exited the second quarter of fiscal 2010 with $1.87bn in cash and equivalents.

Steve Appleton, Micron's chairman and CEO, said that the chip maker positioned itself well during the recession, and is now reaping the benefits of technology investments, operational control, a broader portfolio of memory and flash products, and the economic rebound.

Micron's DRAM product sales were up 24 per cent in the quarter, with unit volumes up 17 per cent and average selling prices for memory rising by 7 per cent compared to a year ago; profits for memory products were assisted mightily with the cost of goods sold for memory dropping 7 per cent on a per-gigabyte basis. Average selling prices for NAND flash products dipped 1 per cent, and that pulled down revenues, but the cost of goods sold for NAND fell at 6 per cent, helping to boost profits.

In a conference call with Wall Street analysts, Mark Adams, Micron's VP of worldwide sales, said that fatter memory configurations are helping to pump up Micron's numbers. The shift to DDR3 memory is helping, since DDR3 modules tend to be fatter, but DDR2 memory shipments were also up in terms of aggregate bit capacity by 11 per cent compared to the first fiscal quarter. That's still lower than the 28 per cent sequential growth for DDR3 capacity shipped. DDR3 memory accounted for 45 per cent of total memory shipped, by bits, in the quarter.

Micron is particularly excited about its prospects with server-related memory sales expected to more than double to $2.6bn this year, and networking-related memory sales to account for $2.4bn, an increase of 60 per cent over 2009's sales levels. (These are non-PC DRAM sales figured cited by Micron from Gartner, and presumably global figures. Although that server memory number seems pretty low.) In the second fiscal quarter ended, DRAM revenues relating to servers were up 22 per cent, and server customers are forecasting growth this year of anywhere between 80 and 100 per cent in this segment. DRAM sold to networking and storage providers rose 24 per cent in the quarter, with ASPs up 20 per cent. ®

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