NewsDude
09-19-2008, 03:20 PM
A $5.85 billion bid by Samsung Electronics Co. to take over SanDisk Corp., a wounded competitor that also serves as a partner, reflects the turbulence in the market for flash memory, a key ingredient in digital cameras, music players and other devices.
For now Samsung has been rebuffed in its attempt to scoop up SanDisk for $26 per share. SanDisk called the offer an "opportunistic attempt" to take advantage of its slumping stock price. But SanDisk left open the possibility for further negotiations if the *** were sweetened, and SanDisk shares jumped $6.19, 41 percent, to $21.23 on Wednesday.
The memory market is prone to severe boom-and-bust cycles, like the rest of the semiconductor industry, and is suffering now from a prolonged funk caused by a glut of chips and plunging prices, even though demand is high.
Those pressures have whacked companies like Milpitas, California-based SanDisk, which owns more than a third of the U.S. market for flash memory cards.
SanDisk's profit has plunged 43 percent over the past two years, to $218 million in 2007, while its stock has tumbled from more than $60 per share in 2006 to less than $15 per share before word of the acquisition talks leaked this month. That decline vaporized $9 billion in shareholder wealth -- and cracked an opening for South Korea-based Samsung.
Among other things, Samsung is the world's second-biggest semiconductor company, behind Intel Corp., and the biggest maker of a type of memory chip called NAND flash. In SanDisk, Samsung sees the chance to pick up valuable patents on current and future memory technologies and absorb a well-known company with steadily improving sales.
SanDisk had $3.9 billion in revenue last year, a nearly 20 percent improvement over 2006. Although its profits and market value have suffered, the company still enjoys rising demand for digital devices that...
More... (http://www.toptechnews.com/story.xhtml?story_id=61956)
For now Samsung has been rebuffed in its attempt to scoop up SanDisk for $26 per share. SanDisk called the offer an "opportunistic attempt" to take advantage of its slumping stock price. But SanDisk left open the possibility for further negotiations if the *** were sweetened, and SanDisk shares jumped $6.19, 41 percent, to $21.23 on Wednesday.
The memory market is prone to severe boom-and-bust cycles, like the rest of the semiconductor industry, and is suffering now from a prolonged funk caused by a glut of chips and plunging prices, even though demand is high.
Those pressures have whacked companies like Milpitas, California-based SanDisk, which owns more than a third of the U.S. market for flash memory cards.
SanDisk's profit has plunged 43 percent over the past two years, to $218 million in 2007, while its stock has tumbled from more than $60 per share in 2006 to less than $15 per share before word of the acquisition talks leaked this month. That decline vaporized $9 billion in shareholder wealth -- and cracked an opening for South Korea-based Samsung.
Among other things, Samsung is the world's second-biggest semiconductor company, behind Intel Corp., and the biggest maker of a type of memory chip called NAND flash. In SanDisk, Samsung sees the chance to pick up valuable patents on current and future memory technologies and absorb a well-known company with steadily improving sales.
SanDisk had $3.9 billion in revenue last year, a nearly 20 percent improvement over 2006. Although its profits and market value have suffered, the company still enjoys rising demand for digital devices that...
More... (http://www.toptechnews.com/story.xhtml?story_id=61956)