Micron Technology Inc. reported today that sales for its fiscal Q1 2006 ended December 1 were $1.36 billion, up 8 percent on both a sequential and year-over-year basis.
Fiscal Q1 2006 net income was $62.6 million or 9 cents per diluted share, compared to net income of $43.1 million or 7 cents per diluted share in fiscal Q4 and down from net income of $154.9 million or 23 cents per diluted share in the same quarter last year.
Despite PC DRAM price pressure in Q1, Micron reported that its gross margin remained stable at approximately 23 percent as a result of increasing sales of higher gross margin products, including CMOS image sensors, specialty DRAM and NAND Flash. In addition, Micron said its gross margin was enhanced by lower costs achieved through further manufacturing efficiencies.
Sales of specialty DRAM products including synchronous and pseudo-static, CMOS image sensors and NAND Flash represented approximately 45 percent of the company’s net sales for Q1.
Last month, Micron entered into an agreement with Intel Corp. to form IM Flash Technologies LLC (IMFT) that will be owned 51 percent by Micron and 49 percent by Intel, with financial results to be included in the consolidated financial statements of Micron following the closing of the transaction, which is expected to occur in January 2006.
Upon the satisfaction of customary closing conditions, Micron said it will contribute assets valued at $995 million and $250 million in cash and Intel will contribute $1.2 billion in cash and notes to IMFT.
In a related agreement, Micron and Intel have agreed to supply Apple Computer with a significant portion of IMFT's NAND flash memory output, and Apple agreed to pre-pay $250 million to each of Micron and Intel.
As of the end of Q1, Micron said it had cash and short-term investments of $1.38 billion. Cash provided from operating activities in Q1 was $425 million. Micron said capital expenditures for fiscal Q1 were $331 million and the company estimates total capital expenditures for fiscal 2006 will be approximately $1.5 billion for its wholly-owned operations. Capital expenditures in fiscal 2006 for IMFT are estimated to approximate an additional $500 million which will be funded by IMFT's initial capitalization.
“Micron’s financial results were enhanced by our success in broadening our product portfolio, which significantly reduced the impact of a 15 percent decline in industry PC DRAM average selling prices,” said Steven R. Appleton, Micron’s chairman, CEO and president, in a statement.
“Our manufacturing lines also showed strong execution for the quarter. Even as we dedicated additional production capacity to CMOS image sensors, megabit production of semiconductor memory products increased seven percent compared to the fourth quarter,” he added.
Micron also announced the appointment of Dr. Teruaki Aoki and Robert Switz to its board of directors effective February 7, 2006.
Aoki is currently an advisor to Sony Corp. Prior to this role; he served as senior executive VP and executive officer of Sony as well as president and COO of Sony Electronics USA.
Switz is currently president and CEO of ADC Telecommunications Inc., which provides products and services for wireline, wireless, cable and broadcast service providers as well as enterprise network operators around the world.
