Infineon Cleans Up, Making It a Consolidator or Acquisition Target

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SP
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Re: Infineon Cleans Up, Making It a Consolidator or Acquisition Target
SP   11/18/2010 4:32:07 PM
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Thanks Bolaji for clarifying. If its for sale and in case ATIC buys it, I am sure it would be a big news in the semiconductor industry with Abu Dhabi being central point in discussion.

Bolaji Ojo
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Re: Infineon Cleans Up, Making It a Consolidator or Acquisition Target
Bolaji Ojo   11/18/2010 6:39:20 AM
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SP, Infineon might be a potential acquisition target but I don't see this happening right now. Infineon is still a big company by revenue and capitalization, which means a buyer would have to dig deep to fund the purchase. Few companies in the semiconductor world today has that kind of cash or is able to raise what would be required to buy Infineon.

There are several possibilities, however. A private equity group could orchestrate a leverage buyout of Infineon, similar to deals done with fellow European NXP (former Philips Semiconductor) and Freescale Semiconductor. A more exciting possibility could be for Advanced Technology Investment Co. of Abu Dhabi to make a bid for Infineon, further establishing it as a catalyst and formidable player in the sector. Could this happen? I can't say but the German shareholders in Infineon as well as concerns about Europe's fading clout in the semiconductor market could make this a difficult or near-impossible deal.

Bolaji Ojo
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Re: Analyst's profligacy concern
Bolaji Ojo   11/18/2010 6:31:45 AM
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Infineon's recent history is still too fresh and too raw for the company to forget the trauma of the last several years. I appreciate James Crawshaw's concern but I suspect Infineon's management is not going to be throwing cash all over the place anytime soon. Their likely strategy would be targeted acquisitions in specific product areas to shore up their portfolio. A large acquisition that would necessitate their borrowing from banks or the equity market is unlikely in my opinion.

SP
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Infineon Cleans Up, Making It a Consolidator or Acquisition Target
SP   11/17/2010 4:13:05 PM
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It would be interesting to see who acquires Infineon.

Anna young
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Analyst's profligacy concern
Anna young   11/17/2010 8:36:00 AM
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Bolaji, I just read a report expressing concerns "about a return to profligacy" at Infineon from Standard & Poor's Equity analyst James Crawshaw. The analyst likes the company's performance but thinks the management seems ready to return to its old ways. Here are excerpts from the report:

"While we think Infineon has left plenty of upside potential in its fiscal year 2011 guidance and, having jettisoned DRAM and Wireless, is a less risky business than in the past, we are concerned that with EUR2 bln of cash burning a hole in management's pocket a return to profligacy could see history repeat itself. Management is already guiding for a capex hike of 70% in fiscal year 2011 in addition to potential acquisitions."

Do you see Infineon using its current cash for acquisition and what do you expect of the management now that the company is in much better shape?



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