How do you sell something nobody wants?
That's the problem facing Infineon Technologies AG as it tries to find a buyer for its 77.5 percent stake in memory IC manufacturer Qimonda. Private equity investors aren't interested in Qimonda, according to Infineon CEO Wolfgang Ziebart, because the company's cash flow isn't attractive enough.
Infineon could distribute Qimonda shares to its investors, but stockholders might not be so receptive to that idea. Qimonda's stock price has fallen in recent weeks to a low of $3.04 from the 52-week high $17.29. Investors might not want to be saddled with additional shares in Qimonda because management may need them to chip in if cash runs low.
So, Infineon has been talking with other DRAM suppliers, according to Ziebart. Reports say those talks include Micron Technology, Elpida and Hynix. One of them might be interested in taking Qimonda just to gain access to its technology, plants and engineers.
The options available to Infineon aren't that many, and most of these would probably result in a book loss of its investment in Qimonda.
Advanced Micro Devices Inc. is headed in the same direction if the company's top executives continue to drag their feet on a reorganization and implementing an asset-smart manufacturing strategy floated last year. AMD's stock price is sinking again—it fell back to $5.96 on Tuesday (April 22) after initially pulling back from a 52-week low of $5.31; the one-year high was $16.19.
Today, AMD's long-term debt ($5 billion) far exceeds the company's market value of approximately $3.61 billion. The company's revenue is growing, though, and it is now rolling out products that can halt rival Intel Corp.'s share gains. Still, AMD is in a financial crisis, one it must resolve before events force a fire sale of the company.
Like Qimonda, it may not have many takers.