AMD’s Spansion lowers price for IPO

Spansion, the flash memory venture spun off by Advanced Micro Devices and Fujitsu, has reduced the price of its public stock offering to between $13 and $14 per share, from a range of $16 to $18 previously, the company said Thursday.

The change means the net proceeds Spansion expects to collect from the sale should total around $493 million, from a previous target of $622 million, the flash memory chip maker said in a filing to the U.S. Securities and Exchange Commission (SEC). The revised figure is based on an assumption of $13.50 per share. The company said every $1 reduction in the offering price would shave $37 million off the proceeds from the sale.

The company did not offer a reason for the price reduction, but it did provide unaudited financial results for the first nine months of 2005, which show a decline in business compared to the same time last year. Spansion said its sales from the beginning of the year through Sept. 25 reached $1.41 billion, for a loss of $256.6 million during the time. During the nine months through Sept. 26 last year, Spansion’s sales were far higher at $1.78 billion, and it posted a net profit of $6.9 million.

At the same time as the initial public offering (IPO), Spansion’s wholly owned subsidiary, Spansion LLC plans to issue $400 million in senior unsecured notes in order to repay debt, including all amounts owed under promissory notes to AMD and Fujitsu, the company said.

In a separate statement to the SEC on Thursday, Spansion said it would offer an additional 2,165,943 shares to the underwriters of the share offering at $12.00 each, for a possible total of $25.99 million in proceeds. The public offering will commence as soon as is practical after the effective date of the registration statements filed Thursday, according to the filing.

Earlier this year, Spansion said it planned to sell a total of 35,294,118 shares in the public offering. The company did not set a date for the offering.

AMD will own about 40 percent of the total outstanding shares in Spansion after the IPO, and Fujitsu would own about 27 percent of the shares, according to the filing. AMD currently owns 60 percent of Spansion, while Fujitsu owns 40 percent.

Spansion makes NOR flash memory, which has been losing market share to NAND flash memory for the past few years. NAND flash memory is able to store fare more data than NOR, but NOR memory loads and operates software much faster than NAND. NOR is mainly used in mobile phones and PDAs, while NAND is used in devices that require a lot of storage space, such as digital camera memory cards and MP3 players.

To compete against NAND, Spansion has developed a new chip it calls ORNAND, that is supposed to deliver the software speed of NOR and the huge storage capacity of NAND memory.