Micron CDR (NEO:MU)
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Micron Technology Inc.'s (MU) fiscal third-quarter loss widened on lower sales and a write-down on the value of its imaging unit, but its gross margin turned positive after three negative quarters as the cost of producing chips fell below their selling price.

The loss was the 10th consecutive quarterly loss for the memory-chip maker.

Micron, the last U.S. maker of dynamic random-access memory chips, has suffered from three years of oversupply. Cuts in manufacturing capacity across the sector have helped to stabilize prices, but demand remains depressed.

For the quarter ended June 4, Micron reported a loss of $290 million, or 36 cents a share, compared with a year-earlier loss of $236 million, or 30 cents a share. The latest results included a $53 million write-down on the value of its imaging unit, which it plans to spin off this quarter. The amount represents Micron's expected loss on the sale.

Analysts, on average, were expecting a loss of 43 cents a share, according to a poll by Thomson Reuters.

Revenue dropped 26% to $1.1 billion, below the average analyst estimate of $1.18 billion.

Revenue from DRAM chip sales grew 14% sequentially because of an increase in sales volumes. Revenue from NAND flash-memory chip sales was flat sequentially while the sales volume climbed 20%. The average selling price increased for all customers except Intel Corp. (INTC), Micron's joint venture partner. The price to Intel was lower because of cost reductions in NAND production.

Mark W. Adams, vice president of Micron's worldwide sales, said on a conference call that the company saw stronger-than-anticipated demand for its DRAM and NAND bit business. He also said the company continues to grow share in the NAND market, and that he is more optimistic about the sector heading into the second half of 2009.

NAND chips are widely used in consumer electronics, such as MP3 players and digital cameras, while DRAM chips are mostly used in personal computers.

Chief Financial Officer Ronald C. Foster said he expects fiscal fourth-quarter DRAM cost reductions in the low teens and bit production increasing in the mid-to-high teens.

Meanwhile, memory-chip production climbed significantly from the second quarter and sales in Micron's imaging unit jumped 53% sequentially. Foster said the sharp growth signals a possible "bottoming out of demand in the mobile markets combined with some seasonal effects."

Foster also said the company is continuing to "scale down" operating costs as it was aggressive in the third quarter, reducing selling, general and administrative costs to $80 million. The company expects those same expenses to be between $75 million and $80 million in the fourth quarter, driven by the sale of Aptina Imaging Corp., expected to occur at the end of the quarter.

Micron's gross margin rose in the third quarter to 9.7% from 3.2% on lower manufacturing costs.

Micron's shares recently fell 3.2% to $5.13. The stock has lost a third of its value in the past year but has more than tripled from its 18-year low in November.

-By Aja Carmichael, Dow Jones Newswires; 212-416-2187; aja.carmichael@dowjones.com

(Kathy Shwiff also contributed to this report.)