S&P Affirms Integrated Device Technology B+ Rating; Outlook: Negative
NEW YORK, July 23 /PRNewswire/ -- Standard & Poor's today affirmed its single-'B'-plus corporate credit rating on
Integrated Device Technology Inc. [Nasdaq:IDTI - news] and its single-'B'-minus rating on the company's subordinated debt.
The outlook is revised to negative from stable.
The rating reflects the company's good technology position in certain semiconductor niche markets. These strengths are offset
by steepening challenges in both the ''static memory'' and Windows-based microprocessor sectors and by the substantial
expenditures that will be required to maintain its position in this highly competitive industry.
The revised outlook recognizes steeper-than-anticipated price declines, coupled with diminished unit demand. Both conditions
are unlikely to reverse in the near to intermediate term.
The Santa Clara, Calif.-based firm manufactures fast-static-memory (SRAM) semiconductors, and is the leading supplier of
certain other specialized office automation and data communications chips (over 50% of revenues). Integrated Device
Technology's low-end Pentium-class ''Winchip'' microprocessor entered the market in the Spring of 1998.
Overall revenues from the SRAM sector have declined due to aggressive pricing and weaker unit demand and resulting
excessive capacity. The company's Winchip processor has not met its expected transition to faster speed grades, while Intel
Corp. [Nasdaq:INTC - news] plans to accelerate the introduction of its competitive Celeron Mendocino, further pressuring
the product's prospects. Other products are affected by general sector malaise.
Revenues declined 10% sequentially in the June 1998 quarter, while the company reported a $50 million quarter net loss
including a restructuring charge, both of which were anticipated. A second charge is expected during the September quarter,
while marketplace conditions remain very unclear. Integrated Device Technology's ability to profitably manufacture its memory
and microprocessor chips under current industry conditions remains unproven. The company's liquidity, which totaled $209
million on June 30, 1998, should provide adequate flexibility for ongoing needs.
OUTLOOK: NEGATIVE
While the company's restructuring actions are planned to reduce operating expenses and contribute to profitable growth,
marketplace pressures are unlikely to abate over the near to intermediate term. Failure to restore operating profitability could
lead to lower ratings within the next several quarters, Standard & Poor's said. -- CreditWire
SOURCE: Standard & Poor's CreditWire
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