Ron Maltiel of www.maltiel-consulting.com
The news from SanDisk swings wildly from feast to famine. This morning, the maker of flash memory chips sold about 30 percent of its Toshiba joint venture to Toshiba for nearly $1 billion in cash and reduced lease obligations – cutting manufacturing capacity and shoring up its balance sheet.
This afternoon, the troubled Silicon Valley manufacturer admitted to a wider-than-expected third-quarter loss of $132 million on revenue that plummeted 21 percent.
With so much flux, it is hard to gauge whether the firm will succumb to Samsung Electronics’ $5.85 billion buyout offer – or to a higher bid if one should come.
According to one industry expert, the answer is likely no. Ron Maltiel, a semicondustor industry consultant, knows both SanDisk co-founders Eli Harari and Sanjay Mehrotora from when the three worked at Intel, said Harari is not likely to want to let go of the company he built.
And unless SanDisk’s business takes a dramatic tumble in the fourth quarter, the chip maker likely will have the financial resources to survive, he said.
Maltiel says Samsung’s bid might have been made with the hope of seeking royalty concessions from Sandisk on flash memory cards.
On a conference call Monday, SanDisk’s Harari said he was “open” to a combination but at the right price and with the right protections for stockholders. He said there has been no recent communications with Samsung.
SanDisk plans to cut investments in new plants.
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