Siemens Taps Into Semiconductor Demand for Infineon Share Sale
Munich, Feb. 20 (Bloomberg) -- Siemens AG is likely to
benefit from investor enthusiasm for semiconductor companies
when it starts selling as much as 6 billion euros ($5.9
billion) of shares in Infineon Technologies AG tomorrow,
investors said.
The offering could be snapped up by money managers and
individuals hoping Infineon will match the performance of
rivals STMicroelectronics NV, whose shares have risen 28
percent this year, and Royal Philips Electronics NV, up 21
percent.
``It's been a great year for semiconductors,' said Ben
Rogoff, who helps manage 15 billion pounds ($24 billion) at
Aberdeen Asset Management in London. ``European investors have
seen what's been going on elsewhere in the tech arena and will
jump on the back of this one.'
Europe's third-largest chipmaker said it plans to sell as
much as 30 percent in Infineon in a dual listing in Frankfurt
and New York. The size and price of the offer will be
announced Monday. The sale could value Infineon as high as 18
billion euros, analysts said.
``The IPO is absolutely the right thing to do and the
timing is perfect,' said Frank Rothauge, an analyst with
Oppenheim Finazanalyse in Frankfurt.
Siemens Sheds Units
The Infineon share sale is a final step in Siemens'
program to shed less-profitable units that account for 15
percent of sales to better compete with rivals, such as
Philips. Siemens, which makes everything from light bulbs to
power plants, will use the proceeds from the sales to
strengthen its Internet technology and process automation
operations.
Infineon said it will receive at least 500 million euros
($492.6 million) from the sale for expansion.
The sale comes as demand for semiconductors is growing.
Worldwide sales of semiconductors jumped 19 percent to a
record $149 billion last year, fueled by demand for mobile
phones and computer memory, the Semiconductor Industry
Association said. The hunger for Internet access and mobile
devices is expected to push chip sales up 20 percent in 2000
and 21 percent in 2001, the group said.
Still, chip sales are sensitive to the fluctuation of the
economy and could decrease after a couple of years, say
analysts. ``There'll be a cyclical hole, say in 2002 or
2003,' said Rothauge.
Infineon said in December its operating margin will rise
this year, even though prices for dynamic random access memory
chips, microprocessors capable of storing one piece of
information per cell, are expected to fall. The company
forecasts that sales will outpace its competitors' average 19
percent growth rate.
DRAM Weakness
``It looks likes the company will do better than the
industry in the medium term,' said Rogoff. Still, ``the DRAM
market that they serve is sticky -- it's the one area of
weakness in the semiconductor space.'
Infineon said last month it turned to a profit of 117
million euros in the first quarter ended Dec. 31 after a loss
of 31 million euros a year earlier. It posted pretax profit of
231 million euros after a 58 million-euro loss a year earlier.
The Infineon sale isn't the first time that Siemens has
benefited from selling shares of one of its technology-rated
units.
Emulating Epcos
Epcos AG, an electronics components joint venture with
Matsushita Electric Industrial Co., was sold in an initial
public offering last October. Its shares have climbed from 31
euros to 141 euros.
Infineon ``is one of the higher profile IPOs in the tech
space,' said Rogoff. ``There's a massive shortage of supply
of such issues.'
Deutsche Bank AG and Goldman Sachs Group Inc. are leading
the group of banks managing the share sale, which runs through
March 10 and will include early subscription incentives for
individual investors. |
