Micron Technology Inc. missed Wall Street’s sales estimates amid price declines in the memory market.

Thanks to a one-time gain from its NAND flash-memory venture with Intel Corp., Micron (Boise, Ida.) had a net income of $193 million, or $0.27 per diluted share, on net sales of $1.2 billion for the second fiscal quarter.

It was good and bad news at Micron. Wall Street was looking for $0.15 a share on sales of $1.34 billion for the quarter.

For the first quarter of fiscal 2006, the company reported net income of $63 million, or $0.09 per diluted share, on net sales of $1.4 billion. In the like period a year ago, Micron posted a net income of $117.9 million, or $0.17 a share, on sales of $1.3 billion.

In the second quarter, the company achieved an 8 percent reduction in cost-per-megabit for DDR and DDR2 memory products, compared to the first quarter of fiscal 2006. But its revenues and gross margins decreased in the second quarter compared to the first quarter of fiscal 2006, primarily as a result of declines in average selling prices for memory products.

IM Flash Technologies LLC, a joint flash-memory venture between Micron and Intel, began operations during the second quarter of fiscal 2006. As reported, the initial contributions from the parties included cash from Intel in the amount of $500 million.

In addition, the company recognized a $230 million gain, reflected in other operating income, on the sale of existing NAND flash memory designs and certain related technology to Intel.

Effective as of the beginning of the third quarter of fiscal 2006, Micron began consolidating the operating results of Tech Semiconductor Singapore Pte. Ltd, its fab operations in Singapore. Production from Tech Semiconductor has approximated 20-to-25 percent of the company's overall memory production.

Since 1998, Micron has participated in Tech Semiconductor, a semiconductor memory manufacturing joint venture with the Singapore Economic Development Board (EDB), Canon Inc. and Hewlett-Packard Co.

On March 3, certain shareholders of Tech contributed approximately $260 million in cash as additional capital to the venture. Following the contribution, Micron has an approximate 43 percent ownership interest in Tech.

Effective March 3, Micron entered into an agreement with the EDB, whereby EDB granted Micron an option to purchase from EDB, and the company granted EDB an option to sell to the company, EDB's shares of TECH common stock.

By: DocMemory
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