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Micron sees strong first quarter, lifted by Elpida and chips

Wednesday, 8 Jan 2014 | 8:17 AM ET
Looking good for Micron: Pro
Tuesday, 7 Jan 2014 | 5:18 PM ET
Micron posted better than expected Q1 earnings and revenue. Betsy Van Hees, Wedbush Securities, discusses the company's strong performance.

Micron Technology reported a much higher-than-expected profit in the first quarter, helped by strong sales at its recently acquired Elpida Memory business and a recovery in memory chip prices.

Shares of Micron rose 6 percent in extended trading.

The period ended Nov. 28 was the first full quarter to benefit from sales at Elpida, the last of Japan's dynamic random access memory (DRAM) chipmakers. Micron acquired the company in July.

U.S. memory chip makers such as Micron and SanDisk Corp have been gaining since last year as prices of memory chip prices rebounded from lows hit in 2012.

Pacific Crest Securities analyst Monika Garg said DRAM prices were boosted further by a September fire at a China plant of rival SK Hynix Inc that created a temporary supply shortage.

Garg estimates that PC DRAM chip pricing have increased about 25 percent since the fire. The chips, mostly used in PCs, accounted for 48 percent of Micron's revenue in 2013.

Westend61 | Brand X Pictures | Getty Images

Revenue from DRAM products in the first quarter rose 69 percent from the fourth quarter ended Aug. 29.

Micron reported a net profit of $358 million, or 30 cents per share, for the first quarter. This compares with a loss of $275 million, or $0.27 per diluted share, a year earlier. Excluding items, the company earned 77 cents per share. Revenue rose 120 percent to $4.04 billion.

Analysts on average had expected earnings of 44 cents per share on revenue of $3.72 billion, according to Thomson Reuters I/B/E/S.

The Boise, Idaho-based company's shares were trading at $23.32 after the bell. They closed at $21.73 on the Nasdaq on Tuesday.

--By Reuters

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