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To: jackmore who wrote (134748)	7/18/2004 3:21:29 PM
From: jackmore	Respond to of 152472

Motorola cuts IPO price for chip arm by a third By Simon London in San Francisco Published: July 17 2004 5:00 \| Last Updated: July 17 2004 5:00 Freescale Semiconductor yester-day cut its initial public offering price by a third as the Motorola unit succumbed to increasing investor nervousness about the chip sector's prospects. Motorola sold 121.6m shares as planned but cut the offer price to $13 a share, from the targeted $17.50-$19.50 range, lowering its proceeds to $1.58bn, rather than the $2bn that had been hoped for. The shares rose 7.85 per cent to close in New York at $14.02. Semiconductor stocks fell heavily this week as investors worried that the industry could be heading into a cyclical downswing after three years of double-digit growth. On Monday, Merrill Lynch downgraded the sector and cut its revenue growth forecast for 2005 from 16 to 6 per cent. Some industry analysts now expect negative growth next year. Intel, the world's biggest chipmaker, cut its profit margin forecasts and said inventories rose, even though profits nearly doubled. Advanced Micro Devices also reported strong earnings, but its shares fell when the company described the outlook as "moderate". Freescale is the third largest US semiconductor company, behind Intel and Texas Instruments, and the ninth biggest worldwide. The company, which sells chips used in car, networking and wireless communications, recently returned to the black after posting multibillion-dollar losses in 2001-2003. Motorola is spinning off the business to focus on its cellphone and other businesses under Ed Zander, the former chief operating officer at Sun Microsystems brought in this year as chairman and chief executive. Motorola still owns 70 per cent of the stock and controls 92 per cent of the voting rights. The class A shares sold to outside investors have only one-fifth the voting power of the class B shares. Sentiment towards Freescale was not helped by unenthusiastic research reports by analysts. In a note published on Tuesday, Adam Parker at Sanford Bernstein said the share offering "is not designed so much to unlock hidden value in the semiconductor business as to remove an underperforming business from the parent company". Fulcrum, a San Francisco-based investment bank, said the company had lower than average growth prospects because its products were used in industries that were expected to grow more slowly than other technology- consuming sectors. Goldman Sachs co-ordinated the IPO with Citigroup and JP Morgan as joint book-runners. news.ft.com