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Infineon hopes IPO of Qimonda will boost bottom line

The German chipmaker Infineon on Friday finally gave the green light for shares in its memories unit to be floated on the stock market, a move the group hopes will reinforce its bottom line.

The company's memory chip subsidiary Qimonda is to be listed in an initial public offer on the New York Stock Exchange, probably in the second week of August.

The IPO will consist of 63 million American Depository Receipts, or ADRs, of which 21 million will come from the stake held by Infineon.

Another 42 million ADRs will come through a capital increase by Qimonda.

With a price range of between US$16 and US$18 per share, the operation is expected to raise US$1 billion to US$1.1 billion, of which some US$300 million will go towards Infineon's coffers.

Qimonda expects to receive proceeds of US$672 million to US$756 million from the sale of the 42 million ADRs, and intends to spend it on research and development.

The forecasts have decreased slightly because until recently the same overall figure was being mentioned, but in euros.

"I think the price is right and proper," Infineon's finance director Peter Fischl said on Friday, while Infineon president and chief executive officer Wolfgang Ziebart said the group never "gave an estimate of what we are expecting."

But the impending listing is raising concern about the group's strategy.

Infineon has for some time threatened to sever ties with the memory-chip part of the business because it is subject to large fluctuations in demand and prices.

The separation with Qimonda will see the company "enter a new era," Ziebart said recently.

Infineon will initially retain an 80 percent stake, but intends to sell it off at some point, it said.

But news that the IPO would go ahead came just as the group's problem child was beginning to perform well, while its two remaining divisions, one which makes memory chips for cars, electronics and industrial use and the other for telecommunications, put in poor performances.

This was a good sign for buyers looking to snap up Qimonda shares but looked bad for Infineon, which is set to lose nearly 40 percent of its sales following the spin-off.

Its biggest client in this regard, Taiwan-based BenQ Corp (明基), has troubles of its own, which means Infineon will have to look elsewhere.

BenQ is a supplier of computer, communications and consumer electronics products.

"Investors and employees alike would like to know how Infineon is going to get back its old stature," the German daily Handelsblatt said this week.

"Even after listing Qimonda, Infineon is not going to have peace of mind," it said.
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