Goodbye everyone! It was a fun, and profitable two days!
As a parting peace offer, please accept this: I have heard from an excellent source that HWYM is being bought up by GTE soon at at least a 300% premium.
but as I said, wafers are a commodity. You may have gold sitting around, but would you sell it at these prices? No, you withhold it, wait for the price to go up, and then dump it on the market.
cbs.marketwatch.com
TI may sell DRAM business
But analysts say a sale to Micron is unlikely
By Binti Harvey, CBS MarketWatch
04:52 PM June 09, 1998
DALLAS, Texas (CBS.MW) -- Texas Instruments Inc. shares surged Monday on speculation Micron Technology Inc. will buy its flagging memory chip business.
TI (TXN) shares jumped 2 11/16 to 53 1/2 after The New York Times reported that the company is in talks to sell its memory-chip operations to Micron Technology (MU), which gained 11/16 to 24 3/4. Neither company responded to calls seeking comment.
Analysts were skeptical that a deal with Micron will materialize, but said investors shouldn't expect TI to stay in the memory chip business for long.
"It's no secret that TI wants to get out of the memory business," said William Milton, analyst at Brown Brothers Harriman.
TI has been gradually reducing its exposure to the volatile, and increasingly unprofitable memory business over the past year, selling its 33 percent stake in a joint venture with Taiwanese chipmaker Acer Inc., and ending a similar joint venture with Hitachi.
TI derives only about 12 percent of its revenue from memory chips, but the business has a more significant impact on the company's bottom line. In the most recent quarter, the company reported a 60-percent decline in dynamic random access memory prices, which offset exploding growth of its digital signal processors, used in a wide range of communications equipment.
Possible benefits
On the surface, a sale to Micron would appear to benefit both companies. TI still owns a 25-percent stake in two joint venture operations, one with Hewlett Packard and Canon in Singapore and the other in Japan with Kobe Steel. Texas Instruments also owns an older manufacturing facility in Italy.
For its part, Micron remains committed to the memory business, and is openly seeking to increase its memory-chip assets in order to gain market share from Asian competitors. Nevertheless, analysts see little prospect for a mutually satisfying agreement.
"Micron has made it clear that it is not interested in acquiring a minority stake in a joint venture, and TI's facility in Italy is not state of the art," Milton said. In order to meet Micron's requirements, the Italian plant will need considerable upgrades.
Turnaround?
Dan Scovel, chip analyst for Fahnestock & Co. also pointed out that Micron has halted completion of its own new factory in Utah pending a turnaround in the memory chip industry. Scovel questioned the notion of buying an older factory unless it would be cheaper than finishing the Utah facility.
Despite potential barriers to a deal with Micron, analysts agree TI isn't likely to remain in the memory chip business much longer. "It's becoming more and more urgent that TI get out of this business," said Milton. "But they still have contractual obligations they have to meet."
"I don't think [TI] will sell to Micron, but they are exiting the business," said Mona Eraiba of Gruntal & Co. "They're phasing out research and they've already been reducing their exposure, but it's not as simple as just selling the entire business in one big chunk."
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