Chipmaker Micron forecasts third quarter loss but sees improvement later in 2016

(Reuters) - Micron Technology Inc (MU.O) forecast a surprise loss for the current quarter, as the memory chip maker continues to grapple with weak demand for its chips amid a slowdown in personal computer shipments.

But the company, which makes makes dynamic random access memory (DRAM) and NAND memory chips, reported a narrower-than-expected loss for its fiscal second quarter and said it sees improvement beginning in the second half of the calendar year.

Shares of Micron were up marginally at $10.57 in extended trade on Wednesday.

"Although we continue to navigate challenging market conditions, we are on track with deploying our advanced DRAM and NAND technologies and improving our cost structure," Chief Executive Mark Durcan said in a statement. "As a result, we expect to significantly improve our competitive position as we move through the second half of 2016 and beyond."

Micron forecast an adjusted loss of 5-12 cents per share for its fiscal third quarter ending June, compared with analysts' average estimate for a profit of 4 cents a share, according to Thomson Reuters I/B/E/S.

Micron forecast third-quarter adjusted revenue of $2.8 billion–$3.1 billion, compared with analysts' estimate of $3.20 billion.

NAND flash memory chips are widely used in smartphones, cameras and tablets to store music, pictures and other data, while DRAM chips are used in PCs. Micron is the last major U.S.-based manufacturer of DRAM chips.

Global PC shipments fell 10.6 percent in the quarter ended December, research firm IDC said in January, the largest decline since IDC started tracking PC shipments.

Micron, which competes with Samsung Electronics Co Ltd and SK Hynix Inc, has been investing to ramp up production of its higher-margin 20 nm DRAM chips and develop more efficient 3D NAND chips.

"We view the upcoming 3-D NAND and 20-nanometer DRAM product ramps as promising tailwinds for fiscal 2017," Morningstar analysts said in a note.

The company forecast an adjusted gross margin of 16.5 percent to 19 percent for the current quarter, which should have been "much higher," Redstone Technology LLC analyst Jagadish Iyer said, noting that the 20 nm DRAM ramp was "probably very gradual."

Excluding items, the company reported a loss of 5 cents per share, compared with the average analyst estimate of a loss of 8 cents.

Net sales fell 29.6 percent to $2.93 billion in the fiscal second quarter ended March 3, hurt by a 10 percent fall in DRAM average selling prices.

Analysts had expected sales of $3.05 billion.

Shares of Micron have fallen nearly 61 percent in the last 12 months through Wednesday.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Maju Samuel and Leslie Adler)