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New York: Micron Technology, the US maker of computer-memory chips, will have to raise money soon because the company is running low on cash, according to Wachovia.
Micron's net cash declined by $474 million during the November quarter as memory-chip prices plunged, Wachovia analyst David Wong said in a report. While prices have improved lately, they are still so low that most memory makers will post significant losses for many quarters yet, he said.
A glut of memory chips during the past two years has forced Micron and its rivals to sell products below their cost of production. The recession and the tightening of credit markets are compounding the slump by curbing demand and making it harder to raise money. Micron will need to seek funding over the next two to three quarters, Wong said.
Micron, based in Boise, Idaho, fell 23 cents, or 8.9 per cent, to $2.36 in New York Stock Exchange composite trading on Wednesday. The shares lost 67 per cent of their value last year.
Micron had about $1 billion of cash and short-term investments at the end of November and debt of $2.9 billion. The company reported a net loss of $706 million in its most recent quarter, its eighth money-losing quarter in a row.
"Our current cash balance will be in pretty good shape for a while," Micron Chief Executive Officer Steve Appleton said last week on a conference call with analysts.
"Whether we choose or not to raise additional money is dependent on what happens in some of the markets."
Micron spokesman Dan Francisco said the company has nothing to add to Appleton's comments. Wachovia's Wong did not say how Micron might raise money.
Appleton is trying to shore up memory prices by controlling more of the industry's production. The company agreed in October to pay $400 million for a 35.6 per cent stake in Inotera Memories from Qimonda.
Micron also announced plans that month to cut about 2,850 jobs over the next two years and reduce production.
Micron is the only remaining US maker of dynamic random access memory chips, or DRAM, after competition from Asian suppliers forced Texas Instruments and Intel out of the business.
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