Micron Electronics issues profit warning

www.infoworld.com |  Hardware

MICRON ELECTRONICS LATE Thursday warned that its earnings for the quarter ending
Nov. 30 will be lower than expected, citing lower memory chip prices as a primary
reason for the profit shortfall. Revenue, however, has also been affected by slower-
than-expected holiday season sales of consumer PCs, the company said in a statement.

The Nampa, Idaho-based PC vendor and ISP now expects to report earnings per diluted
share in the 1 cent to 4 cents range on revenue of between $385 million and $400
million for the quarter. Micron said it will report the final results on Dec. 20.

Wall Street had expected Micron to post earnings per share of 11 cents, according
to a consensus estimate from nine analysts polled by First Call/Thomson Financial.

Micron's profit warning came only a day after rival PC vendor Gateway issued a
similar alert, also citing lower-than-expected demand for PCs during the traditionally
busy holiday season.

While Micron said that the slower PC sales had resulted in a revenue shortfall of
$30 million to $35 million during the quarter, the company put most of the blame on the
recent slump in DRAM prices.

If DRAM pricing had held steady at the immediately prior quarter's levels, the
company's SpecTek memory chip business division would have realized approximately $85
million more in sales, Micron said in the statement. Micron Electronics is majority
owned by Boise, Idaho-based DRAM maker Micron Technology.

The lower-than-expected PC demand, meanwhile, had mainly affected sales at Micron's
U.S. retail partners, according to the statement. The company also sells its PCs
directly to end-users.

In regular trading on the Nasdaq exchange Thursday, Micron Electronics share price
hit the skids amid a general sell-off in PC-related stock to close at $5.31, down $1.06
on the day. The profit warning was issued after the market's close, and the Island ECN
online trading Web site reported the shares slipping further in after-hours trading to
$4.75.

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