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Jazz Technologies mum about buyers

Posted: 12 May 2008     Print Version  Bookmark and Share

Keywords:speciality foundry  CMOS  BiCMOS 

Earlier this year, speciality foundry Jazz Technologies Inc, said that it had initiated a review of its ''strategic alternatives to enhance stockholder value.'' In other words, Jazz is up for sale, though it has yet to announce a buyer.

During a conference call May 7, the speciality foundry company declined to comment on discussions with potential suitors. The company also reported another loss for the quarter.

In order, here's my predictions which company might buy Jazz:

1. X-Fab Semiconductor Foundries AG—German foundry vendor has been on an acquisition spree. Both X-Fab and Jazz are going after the same mixed-signal and analogue customers.

2. Vanguard International Semiconductor Corp.—Backed by Taiwan Semiconductor Manufacturing Co. Ltd, Taiwan foundry Vanguard would love to garner more capacity in the mixed-signal space.

3. On Semiconductor Corp.—Strange idea, but there are rumours.

4. Chartered Semiconductor Manufacturing Pte Ltd—Singaporean foundry would love more capacity, but a U.S. acquisition presents a major risk.

5. Others in the running? ASMC, HHNEC, IBM.

Who is Jazz?
Jazz, a pure-play foundry that spun out of Conexant Systems Inc. several years ago, specialises in RF and mixed-signal fabrication, using CMOS, BiCMOS and SiGe BiCMOS processes.

Over the years, the company has struggled to become profitable. It is also looking for a new fab to boost its capacity.

Jazz has already been acquired once. In 2006, Acquicor Technology Inc., a ''blank cheque'' equity firm run by three former executives from Apple Computer Inc., acquired speciality foundry provider Jazz for Rs.1,048.42 crore ($260 million) in cash.

Several industry veterans from Apple and other companies, including Gilbert Amelio and Steve Wozniak, recently formed the equity firm. Amelio is the chairman and CEO, but Wozniak is no longer with Jazz.

In the conference call, Amelio said there was a slowdown in demand in the quarter. Q1 08 revenues were Rs.204.85 crore ($50.8 million), compared to Rs.93.06 crore ($22.5 million) a year ago. Q4 07 revenues were Rs.226.65 crore ($54.8 million).

Q1 net loss was Rs.16.13 crore ($4 million), or minus Rs.8.87 ($0.22) per share, as compared to net loss of Rs.18.61 crore ($4.5 million), or minus Rs.8.87 ($0.22 per) share in Q4 07. First quarter GAAP net loss was Rs.48.39 crore ($11.7 million) a year ago.

Net loss in Q1 2008 and Q4 07 included the impact of a Rs.3.23 crore ($0.8 million) and a Rs.7.66 crore ($1.9 million) net gain, respectively, relating to the purchase of a portion of Jazz Technologies' convertible senior notes at a discount to their principal amount.

Utilisation backlog
Capacity utilisation was approximately 88 per cent during Q1 08 as compared to approximately 93 per cent during Q4 07. Jazz Technologies estimates Q3 08 capacity utilisation will be approximately 67 per cent.

''Based on our backlog and utilisation metrics, we expect second quarter 2008 sales in the range of $45 million (Rs.181.46 crore) to $47 million (Rs.189.52 crore). The lower revenue reflects initial indications from major customers of inventory build-up in select markets, particularly handset and WLAN. Despite lower revenue, we expect Q2 EBITDA and free cash flow again to be positive,'' said Paul Pittman, chief financial and administrative officer of Jazz Technologies, in a statement.

- Mark LaPedus
EE Times





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