Micron Technology, Inc. (MU) delivered it earnings report for the third quarter of fiscal 2013 that outstripped analyst predictions as demand and costs rose for its computer memory products, swinging Micron to its first profitably quarter in the last two fiscal years.
For the quarter, Boise, Idaho-based Micron reported a 7 percent increase in sales to $2.32 billion from $2.08 billion the year prior. Net income for the quarter was $43 million, or 4 cents per share, compared to a net loss of $320 million, or 32 cents per share, in last year's quarter.
Wall Street was anticipating net income of 2 cents per share on sales of $2.25 billion.
Amongst other things, Micron is a maker of dynamic random access memory, or DRAM, chips that have been experiencing growing demand for their uses in mobile devices as personal computer applications wane. Micron's revenues from DRAM products during the third quarter climbed 23 percent from the second quarter as average-selling prices rose 16 percent and sales volumes increased by 6 percent.
Sales of NAND flash products also improved, up 7 percent from the second quarter on rising average selling prices. Quarter-over-quarter, gross margin improved from 18 percent to 24 percent.
Cost of goods sold inched up 2.9 percent to $1.76 billion.
"As the memory market shows improvement in both DRAM and NAND fundamentals, we continue to focus our efforts on advancing our operational efficiency," said Micron CEO Mark Durcan.
Micron has made progress in its acquisition attempt of bankrupt Japanese chipmaker Elpida by receiving necessary approvals as May deadlines for U.S. creditors to object passed without opposition.
Micron has limped along for the last couple years, along with other chipmakers, as dwindling PC sales and packed inventories drove down prices. Surging mobile device sales are raising demand for Micron's two main products, DRAM and flash memory. The acquisition of Elpida is anticipated to be closed in the this quarter, which will add to future sales (although offsetting sales gains and improving margins because of charges related to the acquisition in the near term), giving Micron a solid upside in the eyes of several analysts, including bullish sentiment from Citigroup and Credit Suisse recently. On Tuesday, Raymond James's Hans Mosesmann reiterated his strong buy rating on Micron and lifted his price target from $12 to $17.
Shares of MU are battling strong headwinds on Thursday, as global markets are still selling-off following comments from Fed Chairman Ben Bernanke on Wednesday afternoon that sent to Dow lower by 206 points. MU has been a stellar Nasdaq performer in 2013, rising about 120 percent to five-year highs by closing Wednesday at $13.97. The earnings beat is not overcoming broad market sentiment with shares down by 3 percent at $13.54 in pre-market action.