Micron Technology reveals buyer of PC biz
Cuts losses and gets out quick
Micron Technology has revealed the buyer of its PC business - investment outfit Gores Technology Group.
Gores will take on the assets and liabilities of the PC making business, while Micron will give it $70 million in cash towards working capital. The deal releases Micron from any obligation to fund the PC business, but the Idaho-based company still stands to get a share of any profits if the business is sold or disposed of within thee years.
The deal is expected to be finalised by the end of the month. As a result of the sale, Micron said it expected to record a second quarter loss from discontinued operations of $162 million.
"Given the realities of the tough PC environment, and our desire to conserve cash to fund our hosting growth strategy, we believe this deal provides the best possible outcome for our shareholders and speeds our path the profitability," said Joel Kocher, Micron chairman and CEO.
Kocher added that the PC business was "becoming a major drain" on the company's cash reserves due to the PC growth slump and price wars between rivals cutting gross margins.
"We've been trying to sell the business for several months, and as the industry has continued to worsen, it became clear that it was the best interest of our shareholders to complete our exit rapidly, cut our losses, and focus on our growing Web hosting business."
Last month, Micron announced its plans to sell off its PC business and to ditch its chip recycling unit SpecTek.
At the time it said it planned to become a pure Web hosting company, and bought Web hosting outfit Interland in a $130 million stock deal. Today it said it expected to have $200 million after the sale of its PC business to help launch the combined Micron Electronics/Interland company. It expects the business to reach EBITDA (earnings before interest, tax, depreciation and amortization) early in 2002. ®