Micron Technology posted mixed quarterly results, and investors pushed its shares lower after the company said persistently low prices for its memory chips had yet to recover.
The slide into bankruptcy of Japanese DRAM chipmaker Elpida in February has created expectations that chipmakers' pricing power, diminished by oversupply, will bounce back this year.
But Micron said DRAM prices had yet to rise and that prices for NAND had fallen compared with the prior quarter.
In after-hours trade, its shares were down 3.2 percent at $8.43, after having closed at $8.71 on the Nasdaq. Shares of Micron, the top U.S. memory chipmaker, are up nearly 40 percent year to date.
Still, recently appointed Chief Executive Mark Durcan told analysts on a conference call on Thursday that the outlook for memory chip prices was on the mend.
Recently we're seeing improvements in the DRAM market ... I think concerns over supply seem to be having a positive or at least stabilizing effect, Durcan said. Overall, we see generally healthy supply/demand outlook for NAND moving forward.
In its first earnings report since former Chief Executive and Chairman Steve Appleton died in a small-plane crash in February, Micron said that it sold 20 percent more NAND and DRAM chips by volume in its fiscal second quarter than in the previous three months. But it said that increase was offset by lower average selling prices.
Appleton was replaced by Durcan, who had been Chief Operating Officer and was long seen as an even-keeled, top technologist.
The demise of Elpida has boosted Micron's stock on expectations the Japanese company's DRAM output, estimated to be about 12 percent of global production, could permanently disappear, pushing up prices in the beleaguered industry.
Analysts say Micron is likely to bid for at least one of Elpida's two fabrication plants in Japan and Taiwan, which could be reconfigured to make more profitable NAND chips, widely used in tablets, smartphones and other hand-held gadgets.
We'll be evaluating market situations as they develop and look for opportunities to strengthen Micron's competitive position, Durcan told analysts on the call.
He said pricing, intellectual property, the competitive landscape and possible improvements in efficiency would all play into Micron's consolidation strategy.
Hit by a shortage of hard drives after floods damaged factories in China last year, personal computer makers had adopted solid-state drives using NAND chips in some of their models.
Solid-state drives are more efficient than traditional hard drives but have yet to become ubiquitous in mainstream PCs. Micron President Mark Adams told Reuters that manufacturers have sold fewer PCs with solid-state drives than expected because prices for them remain high.
Last month, Micron increased its exposure to the NAND market when it announced it would pay $600 million to buy back Intel Corp's stake in two wafer factories the companies ran as a joint venture.
Micron said revenue in its fiscal second quarter, ended March 1, was $2.07 billion, compared with $2.26 billion in the year-ago quarter. Analysts on average expected $2.02 billion, according to Thomson Reuters I/B/E/S.
Micron said gross margin fell to 13 percent from 15 percent in the prior quarter due to pressure on its NOR flash sales in the wireless market.
Micron reported a net loss of $224 million, or 23 cents per share, in the quarter, versus a net profit of $72 million, or 7 cents per share, in the same quarter last year. Analysts expected a loss of 19 cents.
(Reporting By Noel Randewich; Editing by Gary Hill and Steve Orlofsky)