Micron Technology Inc. is in on pace to have another record-setting year, although a couple of factors could ultimately soften the bottom line.
The Boise-based microchip manufacturer reported Thursday a net income of $328.5 million for the first quarter of its 1996 fiscal year but says weaker prices loom for its mainstay semiconductor chips. The income was based on record sales of $1.18 billion for the three months ended Nov. 30 and earnings of $1.51 per fully diluted share of common stock.The $328.5 million profit more than doubled last year's first-quarter profit, and sales also more than doubled the $535 million for the same period.
In the last quarter of fiscal 1995, the company made $281 million on sales of $1.02 billion. That was $1.29 per fully diluted share of common stock.
"Customer demand for semiconductor memory continues to increase," according to a Micron news release. "However, in recent weeks, the industry has experienced downward pressure on pricing for DRAM (dynamic random access memory) products.
"Based on negotiations with certain major customers, the company believes pricing for memory products delivered in the first calendar quarter of 1996 is likely to be modestly lower than for comparable deliveries in the fiscal quarter ended Nov. 30, 1995," the company said.
For the quarter, Micron said its gross margin percentage on semiconductor products improved to 70 percent as a result of relatively stable pricing and lower manufacturing costs.
Periodically, Micron is made aware that some of the manufacturing technology it uses might infringe on rights held by others. The company can't predict how much it could cost to settle such claims.
"Resolution of whether the company's manufacture of products has infringed on valid rights held by other may have a material adverse effect on the company's financial position or results of operations and may require material changes in production processes and products," Micron said.
Micron's declining stock has had no impact on sales. Its stock reached more than $94 per share in September but has declined sharply since.
"There is a difference between Wall Street and what the business is actually doing. Business is still excellent," company spokesman Kipp Bedard said last week.
Micron is currently building a $2.5 billion plant in Lehi, which will double its production capacity. First production from the complex is expected next fall. The company said it has been devoting most of its operating cash flow to increasing capacity but is evaluating debt financing for the cash needed for timely completion of its expansion products.