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Chipmaker Micron soars on better sales, margins
(Associated Press Via Acquire Media NewsEdge) NEW YORK -- Micron Technology soared in midday trading Friday after the maker of memory chips posted stronger sales and margins.
THE SPARK: The company, based in Boise, Idaho, reported its quarterly earnings after the market closed Thursday. Its second-quarter loss was larger than analysts had expected, but its revenue handily beat estimates. Micron also reported lower manufacturing costs and improved profit margins.
THE DETAILS: Micron Technology Inc. lost $286 million, or 28 cents per share, over the three months ended Feb. 28. Revenue rose 3 percent to $2.08 billion, thanks to better sales of memory chips for both mobile devices and personal computers. Analysts had expected $1.92 billion in revenue, according to FactSet.
THE ANALYSIS: Kevin Cassidy, an analyst at Stifel, Nicolaus & Co., lifted his 12-month price target for the stock from $13 to $14. In a report Friday morning, Cassidy noted that Micron's gross margins were much higher than he had expected: 17.6 percent in the second quarter, compared with Stifel's estimate of 12 percent.
Cassidy estimates that Micron should be profitable by the fourth quarter as revenue climbs to $2.38 billion.
Temporary charges held Micron back in the second-quarter. The company took a $62 million charge in the second quarter from the sale of a facility in Italy and lost $120 million on currency contracts tied to the Japanese yen. Cassidy calculates that the sale of the facility took 6 cents out of Micron's earnings per share and the currency loss knocked off 12 cents. The currency contracts are connected to its pending acquisition of Elpida Memory Inc., a chip maker in Japan.
SHARE ACTION: Micron's stock was up almost 12 percent, jumping $1.08 to $10.15 in midday trading.
(c) 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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