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Micron reports a $320m loss as costs increase

Profits chipped away
Tue Jul 10 2012, 15:30
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MEMORY MAKER Micron has reported a $320m loss for the quarter ending 31 May.

While Micron has been negotiating the takeover of Elpida, the firm's balance sheet isn't looking particularly healthy, with sales stagnating at $2.1bn while costs increased to $1.9bn. The firm's net loss for the quarter was $320m, compared to a slim $75m profit in the same period last year.

Micron's sales might have remained steady, but looking at the firm's past three quarters paints an increasingly worrying picture for the company. According to the firm, in the nine months up to 31 May 2012 it has lost $789m on sales of $6.2bn.

Most worrying for Micron is how fast the firm's gross margin - revenue minus the cost of sales - is falling. The firm's figures show its gross profit has halved to $234m in the last year and the trend is mirrored in the nine month figures.

Micron could point to the harsh conditions in the DRAM market as a reason for its lacklustre financials, and while the firm has embraced NAND flash memory producing Crucial branded solid state drives, the margins on those are falling fast.

The firm's big play is to buy Elpida in order to compete with the DRAM industry giants Samsung and SK Hynix, while the trio will have more power to 'stabilise' prices. µ

 

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