September 30, 2009 / 2:20 AM / 9 years ago

UPDATE 3-Micron Q4 beats Street, investors take profits

* Q4 loss 10 cents versus Street view loss 18 cents

* Q4 revenue $1.3 bln vs Street $1.28 bln

* Shares give up initial gains, flat after-hours (Adds executive comment, background, byline)

By Clare Baldwin and Ian Sherr

SAN FRANCISCO, Sept 29 (Reuters) - U.S. chipmaker Micron Technology Inc MU.N posted a narrower-than-expected quarterly loss as improving demand boosted sales and prices, but its shares gave up initial gains as investors locked in profits.

Some analysts said investors were also disappointed that the company did not give any indication that it expected chip prices to continue to recover.

Micron executives said memory chip supply and demand would be roughly balanced for the rest of calendar 2009 as the industry emerges from its worst downturn in decades.

Wedbush Morgan Securities analyst Betsy Van Hees said a rally in chip prices in recent months had encouraged investors, who were looking for a stronger recovery than Micron had suggested.

The company’s shares rose more than 3 percent in after-hours trading before slipping to $8.40, their regular session close. The stock has tripled this year.

“Given the improvement in memory prices, the expectation was that they would outperform the general consensus,” Ragen MacKenzie analyst Taunya Sell said, adding that the stock “has had a nice run in the last few months.”

Micron, which makes memory chips used in computers, cell phones and digital music players such as Apple Inc’s (AAPL.O) iPods, said sales of its DRAM memory chips rose 28 percent in the fourth quarter ended Sept. 3 compared with the third quarter.

That reflected a 19 percent increase in sales volume and an 8 percent rise in average selling prices.

Sales of higher-end NAND flash memory increased 10 percent from the previous quarter on a 23 percent climb in volume.

Analysts say price, heavy investment requirements and the cyclical nature of the memory chip business make it brutal.

Memory makers like Micron have suffered amidst the global economic downturn, shutting factories and laying off workers as demand for electronics has lagged and a worldwide oversupply has triggered a two-year decline in prices.

But there are hints of a turnaround for the embattled sector. Global semiconductor sales in July lagged their year ago levels by more than 18 percent, but posted their fifth consecutive monthly increase according to the Semiconductor Industry Association.

July sales were $18.2 billion, up 5.3 percent from June on consumer demand for netbooks and cell phones, the Association said. It will release data for the month of August on Friday.

“We remain optimistic that market segments like mobile, netbooks and SSDs (solid state drives) will continue to drive strong bit consumption,” Micron vice president of worldwide sales Mark Adams said in a conference call with investors.

Adams said that while supply growth and capital spending had remained historically low, Micron had seen a strengthening of demand this month for memory chips.

But some analysts said investors had factored in more of a recovery in demand for Micron and its rivals, Samsung Electronics (005930.KS) and Hynix Semiconductor (000660.KS).

Micron reported a quarterly net loss of $88 million, or 10 cents per share, compared with a net loss of $344 million, or 45 cents per share, a year earlier.

That was better than a loss of 18 cents a share expected on average by analysts, according to Reuters Estimates.

Revenue fell 10.1 percent to $1.3 billion, and was slightly above the $1.28 billion analysts had expected.

Rival Samsung sounded a more cautious note. The company’s chip division in July swung to a profit, but last week the world’s biggest memory chip and LCD maker warned that the semiconductor sector’s strengthening performance was due to government help, and the South Korean company would look to Thanksgiving as a turning point. [ID:nTP253351] (Editing by Ted Kerr and Lincoln Feast)

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