Spansion Banks on Old Flash Fading From Memory
SAN FRANCISCO -- Spansion (SPSN) has long lived in the low-rent district of the flash memory market, making chips for applications with limited growth prospects and sex appeal.
Now the chipmaker believes it has the secret sauce to take over the entire flash market.
At first glance, Spansion's announcement Monday of its plans to acquire Israel's Saifun Semiconductors (SFUN) for $368 million is a bit of a head-scratcher: Spansion currently licenses Saifun's technology. So the deal, while saving it money on licensing fees, essentially gives Spansion something it already had.
And Saifun has historically had a rough time trying to license its technology to other companies. If Spansion was looking for a way to generate new revenue through intellectual property licensing, it hasn't exactly picked a very hot commodity to peddle.Saifun's $8.7 million in sales in the most recently ended quarter were down 50% year over year -- after Infineon Technologies (IFX) opted to cease licensing its technology -- and the company's shares are down 65% in the past 12 months. This may explain the negative reaction among Spansion shareholders. The stock slipped more than 3% on Monday, and was recently off another 5 cents to $8.04 in Tuesday trading. But executives at Spansion and Saifun are banking that the flash memory market is on the verge of a major change -- and that the two companies have a much better chance of coming out on top by joining forces.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV