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Chipmaker Micron's forecast powered by improving PC market

Reuters

(Reuters) - Micron Technology Inc <MU.O> forecast current-quarter revenue and profit above estimates as a stabilizing PC market spurs demand and boosts prices of its memory chips.

Shares of the company, which also posted its first rise in quarterly revenue in nearly two years, were up about 10 percent at $22.55 in after-market trading on Wednesday.

Micron, which makes dynamic random access memory (DRAM) chips used in personal computers, is benefiting from an improving PC market at a time when supplies remain tight.

"We believe this near-term sweet spot in memory supply/demand dynamics will continue to be favorable, driving memory prices higher," Loop Capital analyst Betsy Van Hees said.

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Average selling prices of DRAM chips rose 5 percent in the first quarter, while sale volumes jumped 18 percent, Micron said.

"We expect favorable supply-demand dynamics to persist in 2017," Chief Executive Mark Durcan said on a conference call.

DRAM chips accounted for about 60 percent of Micron's revenue in the latest quarter.

Market research firm IDC said last month it expected worldwide PC shipments to decline 6.4 percent in 2016, smaller than the 7.2 percent fall it previously forecast.

Micron, which closed its $3.2 billion acquisition of Taiwanese chip company Inotera this month, also makes NAND flash memory chips, widely used in smartphones to store music, pictures and data.

The company forecast adjusted profit of 58-68 cents per share for the second quarter, much higher than the average analysts' estimate of 39 cents, according to Thomson Reuters I/B/E/S.

Micron said it expected revenue of $4.35 billion-$4.70 billion, above the estimate of $3.91 billion.

The Boise, Idaho-based company's revenue rose 18.5 percent to $3.97 billion in the first quarter ended Dec. 1.

However, net income attributable to shareholders fell to $180 million, or 16 cents per share, from $206 million, or 19 cents per share, a year earlier. (http://bit.ly/2hUuv98)

On an adjusted basis, Micron earned 32 cents per share, beating estimates of 28 cents per share.

Up to Wednesday's close, the stock had risen 45.3 percent this year, outperforming a 38.4 percent gain in the broader Philadelphia SE Semiconductor Index <.SOX> during the period.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Sriraj Kalluvila)