Micron (MU), a maker of memory chips, reported weak fourth-quarter results (ending Sept 1) and rounded out a difficult fiscal 2011. The company put up a $0.14 net loss in the fourth quarter and posted significantly lower earnings from the prior year in this fiscal 2011 ($0.17 per share versus $$1.85 per share). Most of the weakness was driven by poor pricing from DRAM (dynamic random access memory), which pushed gross margins down to 15% in its fiscal fourth quarter from 22% in the previous sequential period. Though the firm noted a modest improvement in DRAM pricing the past few weeks, management did state that issues are demand-related versus a “rising oversupply scenario.” Revenue from sales of DRAM fell 12% sequentially, while NAND flash sales saw an 11% increase. The company remains quite bullish on NAND heading into the holiday season, as interest remains strong for smartphones and tablets. We’d steer clear of Micron at this time, and point to Intel (INTC) as a play within the chip space.
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