Feeds

Toshiba plays sugar daddy to SanDisk

Fab financial footwork for flash

SANS - Survey on application security programs

SanDisk is getting almost $300m cash and freeing itself from over half a bilion dollars of equipment lease obligations courtesy of sugar daddy Toshiba.

The two have signed a definitive agreement concerning their flash fabrication joint-venture, following on from a non-binding memorandum of understanding signed in October last year. They each have a half share in this JV, which manufactures flash chips in three fabrication plants. The MoU talked about 30 per cent of the JV transferring to Toshiba via a cash payment to SanDisk and Toshiba taking on equipment lease obligations for plants known as Fab 3 and Fab 4.

The total value at that point for SanDisk was about $1bn. It was fighting off a hostile takeover bid from Samsung at that time, and it was supposed SanDisk needed to strengthen its balance sheet.

The definitive agreement still applies to the restructuring of the Fab 3 and Fab 4 area of the JV but reduces the transferred lease obligation percentage to 'more than 20 per cent', meaning less than 30 per cent. The total worth to SanDisk is 80bn yen ($890m) of which about a third is a cash payment and the rest the reduced lease obligations.

SanDisk and Toshiba will remain equal partners for the JV's remaining capacity and SanDisk has the option to buy back part of the transferred capacity on a foundry basis. It also retains an option to keep investing up to 50 per cent in future Fab 4 expansions and in Fabs 3 and 4 technology transitions. Finally both SanDisk and Toshiba will continue joint technology development in future NAND products and 3D read/write memory.

So, if SanDisk starts to make money again, it can hopefully pay back Toshiba and return to a more equal footing. For now, like a house-owner desperate for cash, it's released some equity in return for cash and reduced mortgage payments. It's nice of Toshiba to oblige, considering that it is facing a world of financial hurt after a tremendously bad final quarter of 2008. It is forecasting a net loss for its current financial year, ending March 31, of 280 billion yen ($3.1bn). In September last year it thought it would make 70 billion yen (c$780m) profit, showing the damage the last quarter inflicted.

It is laying off up to 4,500 temporary workers, cutting spending, reducing output from existing factories and putting off the building of new ones. Reuters is reporting Toshiba is talking to NEC about the merger of some of their chip operations too. Then there is the small matter (not) of buying Fujitsu's hard disk drive operations. In the circumstances, acting as an 80 billion yen bailer-outer to SanDisk seems positively heroic. ®

High performance access to file storage

More from The Register

next story
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Designing a defence for mobile apps
In this whitepaper learn the various considerations for defending mobile applications; from the mobile application architecture itself to the myriad testing technologies needed to properly assess mobile applications risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.