<<MEMC stock hits an all-time low
Saturday, June 13, 1998
By Dan Hieb
Of The Post-Dispatch
* Maker of silicon wafers tightens operation while waiting for a turnaround in semiconducter demand.
MEMC Electronic Materials Inc. hopes to ride out a downturn in the semiconductor market that has pushed the company's stock to an all-time low. The shares closed Friday at $10, down $2.63 for the day. Last July the stock was at $38.94.
"I've been thinking this stock's bottomed out for most of the last year," said Terry Ragsdale, a research analyst with J.P. Morgan Securities in New York. "But it just keeps going lower."
MEMC is the world's second-largest maker of silicon wafers, which are used to make computer chips. Weak sales in Asia and overproduction have translated into losses for technology companies, who are ordering fewer computer chips, thus lowering the demand for wafers.
It's not a recent downturn.
MEMC spokesman Sam Duggan said sales have been lagging and profits have been drying up since 1996.
MEMC's stock decline intensified this week after the company said it expects a big loss in the second quarter. Those numbers won't be released until July 27. The company lost $29.3 million, or about 72 cents a share, in the first quarter, and said the second-quarter loss would be significantly higher.
MEMC has implemented cost-cutting measures in an attempt to stop the bleeding. Hiring was frozen at the beginning of the year and severance packages worth between $23 million and $25 million have been given to employees who volunteered to quit. Six hundred of the company's 8,000 employees have taken the severance packages. Two hundred fifty of those job losses came at the company's plant in O'Fallon, Mo., which had employed 2,500.
The company has also increased the specialization of its factories, which had been making several different wafer sizes, from four inches to 12 inches in diameter. All departments have been ordered to cut spending, and the company is getting price breaks from suppliers.
Duggan said he's not sure when the wafer market will improve. Michael Ferguson, an analyst with St. Louis-based Pauli & Co., doesn't expect a turnaround until sometime next year. But he expects MEMC to make it through the drought.
"They'll be in a good position once demand kicks back in," he said.
Copyright (c) 1998, St. Louis Post-Dispatch>>
This appeared in today's St. Louis newspaper.
Chip |
