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Technology Stocks : Spansion Inc.
CY 23.820.0%Apr 16 5:00 PM EST
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To: KeithDust2000 who wrote (3691)4/1/2008 6:56:41 PM
From: bobs10  Read Replies (1) of 4590
 
Article:

Harrison declined to give a figure for how much it would take to raise its stake in the plant, but he said that the company's existing cash of $585 million and the cash it generates from operations "will be sufficient for all of the capital needs we have over the next several years."

me:

Personally a couple of years seems optimistic, but say he's right, then what? Is that when they expect PCM to save them? If that is their plan they're probably going to have to do an IPO sooner than later just to get survival funding or return to the partners for more cash.

My original understanding was that the reason for this merger was economies of scale. One would suspect that there was a lot of redundancy in the companies, yet I haven't heard anything about staff reductions or closing of redundant/unprofitable facilities. For that matter nothing has been said about how they expect to reduce the losses.

This deal still smells like a 3 day old dead fish. If Numonyx was an exit move by INTC/STM then the only realistic way INTC/STM are going to get their money out is through an IPO. However, if no banks/etc. wanted to finance the deal how are they going to do an IPO? Especially if Numonyx does loose a half $B yearly as the CITI report estimated. Will INTC/STM continue to pour money down the rat hole?

Lots of questions and few answers. I don't think Otellini is an idiot, but I've seen INTC do some pretty weird things in the past. I'm still of the opinion that INTC sees this as a way out, but really, couldn't they have found a cheaper/better way?
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