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?
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, 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.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.