SAN JOSE, Calif. Following a huge loss and a memory downturn, Micron Technology Inc. has cut its capital spending for fiscal 2008.
Steve Appleton, chairman and chief executive of Micron, also announced that the company would implement a headcount reduction. Micron is projected to have ''lower levels of employment,'' he said during a conference call on Thursday (June 29). The call followed Micron's weak third-quarter results.
Rumors about a layoff have been circulating around Micron for weeks. During the call, the company did not give specifics.
On another front, Micron (Boise, Ida.) is projected to spend $2.5 billion in fiscal 2008, down from $4 billion in 2007, according to the company in the conference call.
Some $2 billion is geared for 300-mm projects, including IM Flash Technologies LLC, a joint NAND venture between Micron and Intel Corp. (Santa Clara, Calif.).
Within its 300-mm fab in Utah, IM Flash is ramping up 50-nm NAND devices, based on a multi-level-cell (MLC) technology. After steep price declines earlier this year, NAND is seeing a supply/demand balance, according to Micron.
There is also an improved picture in CMOS image sensors, which has been in the doldrums in recent times.
There is bad news for Micron's DRAM business. While NAND and CMOS image sensors have improved, DRAM is tracking down by 25 percent in the current quarter, according to SG Cowen Securities Corp. (New York).
On Thursday, Micron posted a third-quarter loss of $225 million, or minus $0.29 per diluted share, on net sales of $1.3 billion. This is ''well below'' SG Cowen's estimates.
Going forward, Micron's current quarter appears to be terrible. ''We expect August revenue to increase 3.8 percent, with EPS flat at a $0.22 loss,'' said American Technology Research analyst Doug Freedman, in a recent report.
''We are below the Street for August, with consensus calling for a $0.05 loss on 10.6 percent revenue growth,'' he said. ''We believe there may be upside to our revenue and EPS target, but don't expect management to be confident enough in the recent turn in DRAM to offer an overly bullish outlook.''
Based on the current climate, some wonder if Micron will take the private equity route.