sonki: TXN is trying to get rid of the DRAM business. DRM sales are 10% of TXN total sales. I still do not know what the rest sales of TXN are. I suspect DSP sales may dominate.
Please read the NYT article date June 6, 1998
June 6, 1998
Texas Instruments in Talks to Sell Chip Operations
By LAURA M. HOLSON
texas Instruments Inc., a leading producer of computer chips, is in talks to sell its memory-chip operations to Micron Technology Inc., people close to the talks said Friday.
While the discussions are preliminary and it is always possible they could fall apart, the sale would be a significant move for Texas Instruments, whose earnings have been hurt by overproduction and declining prices in the notoriously fickle market for dynamic random-access memory chips, or D-RAMs.
The deal would allow Micron Technology, one of the nation's leading chip makers, to buy much-needed market share to challenge foreign competitors.
It is not yet known what price Texas Instruments is seeking or how any deal would be structured. The company, based in Dallas, is involved in two joint ventures and has chip-making operations of its own. Analysts estimate revenue for the company's memory-chip business at $850 million for 1998.
Analysts have long pushed Texas Instruments to sell its D-RAM business. The price of D-RAM chips, which are commonly used in personal computers and other devices, has fallen to $3 each from more than $8 a year ago. The D-RAM business accounts for roughly 10 percent of the company's sales.
Texas Instruments has already taken some steps away from the business. In March it sold its 33 percent stake in a joint venture with Acer Inc., Taiwan's largest computer maker, after a nine-year alliance.
"It will help them to get out from under a loss that is killing their stock price and focus on other business," said James Barlage, a senior semiconductor analyst at Salomon Smith Barney.
A sale, he said, would allow Texas Instruments to focus instead on its digital signal processor business, a rapidly growing market. Digital signal processors are specialized chips used in cellular telephones, computer networking equipment, toys and cars.
Both Texas Instruments and Micron Technology declined to comment on whether they were in talks.
But Micron Technology, which is based in Boise, Idaho, has said lately that it wants to expand its operations.
Patrick Adams, portfolio manager of the Berger 100 mutual fund, met with a Micron Technology executive on Thursday in New York who told him the company was "looking to make an acquisition."
"It certainly makes sense for both sides to make the deal work," Adams said.
One obstacle that Micron Technology faces is financing, analysts said. The company does not have enough cash to acquire the business, Barlage said, and would most likely consider debt financing, possibly a convertible bond offering.
Shares of Texas Instruments closed at $50.8125 Friday, down 6.25 cents; Micron Technology closed at $24.0625, up 31.25 cents.
Analysts and industry watchers have speculated for nearly a month about whether the companies were in talks. Texas Instruments, which analysts say is also looking to acquire other properties, was the subject of market speculation on Thursday when analysts said it could be a possible buyer of Integrated Circuit Systems, based in Valley Forge, Pa. Integrated denied it was in talks with Texas Instruments.
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Kind rgds
ANANT |
