Spansion to Pursue Standalone Strategy Focused on Embedded Solutions Market | Cypress Semiconductor
Spansion to Pursue Standalone Strategy Focused on Embedded Solutions Market
New business model aimed at generating positive free cash flow and profitability
- Restructuring plans on track; cash balance at approximately $195 million
- Plans to pursue strategic alternatives for wireless business
SUNNYVALE, Calif., April 22, 2009 -- Spansion Inc. (Nasdaq: SPSN), the world's largest pure-play provider of Flash memory solutions, today announced that the company has decided to pursue a standalone strategy focused on the embedded solutions market and intellectual property licensing. As a result, the company plans to pursue strategic alternatives for its wireless business.
The company also continues its discussions with creditors regarding its restructuring plans, which will ultimately require court approval. The company expects to successfully emerge from its Chapter 11 restructuring process with a sustainable business model aimed at maximizing recovery for creditors; generating positive free cash flow and profitability; and designed to support annual revenues of approximately $1 billion. In addition, the company announced that it believes it has adequate working capital - approximately $195 million in cash as of April 19, 2009 (including approximately $110 million in the U.S.) to support its strategy to emerge as a successful and viable standalone entity.
"Spansion is by far the largest supplier of NOR Flash memory to embedded markets worldwide and is the leader in charge-trapping technology, which we believe has great licensing potential," said John Kispert, president and CEO, Spansion Inc. "Our plan is to leverage our award-winning MirrorBit technology, exceptional customer relationships and innovative industry-leading products to seek sustainable profitability and positive free cash flow."
Spansion plans to continue to support its wireless customers as it pursues strategic alternatives for that business. The company's decision to narrow its focus results from Spansion's proven success in addressing customers producing embedded applications which include consumer, gaming, set-top box, industrial, automotive, PC and PC peripherals, data center servers, telecommunications infrastructure and networking.
The company enjoys a commanding leadership position in this market, with over twice the sales of its closest competitor in 2008 according to market research company iSuppli. The company plans to dedicate its resources to serving the embedded solutions market and plans to grow its market opportunity through its innovations based on its MirrorBit technology.
The company has made substantial progress in bringing its new innovative product architectures to market. Spansion has completed the beta process for its Spansion EcoRAM products and has received initial orders, with first revenue expected in April. The company also has first silicon in-house of its new NAND product offering based on Spansion's charge-trapping technology, 43nm MirrorBit NAND products, with plans for sampling in 2009 and production in 2010. In addition, Spansion is in full production of its industry-leading 65nm high density solutions optimized for the embedded solutions market, and plans to have 45nm MirrorBit NOR solutions sampling in 2009 and in production in 2010.
Spansion, Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed their voluntary petitions for relief under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware on March 1, 2009. On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings.
Spansion (NASDAQ: SPSN - News) is a leading Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. For more information, visit http://www.spansion.com.
This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements. The risks and uncertainties include statements related to IP licensing business strategy, innovative product architectures, EcoRam and any revenue associated with EcoRam, MirrorBit NAND products, completion of the Chapter 11 restructuring process, the ability to reach and sustain a profitable business model, generate free cash flow or survive as a stand-alone entity, and any reference to adequate working capital. The risks and uncertainties related to working capital include the fact that the company has cash in various geographical locations and all or part of the total worldwide cash may not be available in either the US or for working capital as a result of the limitation inherent in the Chapter 11 proceedings in the US or the corporate reorganization proceeding in Japan or as a result of various restrictions in certain geographies as to the ability to remit funds back to the parent company. The risks and uncertainties related to Chapter 11 filings include: any negative impacts on Spansion's business, results of operations, financial position or cash management arrangements; the inability to freely deploy its cash resources throughout the company; the negative impact on relationships with employees, customers, suppliers and contract manufacturers and other stakeholders; the failure of Spansion to obtain initial court orders substantially on the terms applied for; the adequacy of Spansion's cash on hand to fund its ongoing operations or ability to arrange for sufficient DIP financing during the bankruptcy proceeding; actions or orders taken by the U.S. Bankruptcy Court that may impact Spansion operations; the failure of Spansion to obtain the requisite approvals of affected creditors or the courts for any restructuring plan, or to successfully implement such a plan or obtain sufficient exit financing, if required, within the time granted by any court, leading to the likely liquidation of Spansion's assets; that Spansion's common stock could have no value in and following the approval of a restructuring plan and could be cancelled and the potential that The Nasdaq Stock Market may suspend trading or delist any of Spansion's securities on or from such exchange as a result of the proceeding. In addition, risks and uncertainties relating to the company's ability to restructure successfully include Spansion and Spansion Japan's ability to continue their operations while in their respective Chapter 11 or corporate reorganization proceedings, respectively; the ability to capture anticipated cost savings related to the previously- announced reduction in force and other measures taken by the company; and the implementation and success of Spansion's plan to narrow its focus on the embedded solutions market. In addition, the instability of the global economy and tight credit markets could continue to adversely impact Spansion's business in several respects, including adversely impacting credit quality and insolvency risk of the company and its customers and business partners, including suppliers and distributors; bookings; and reductions and deferrals of demand for Spansion products. The company urges investors to review in detail the risks and uncertainties discussed in the company's Securities and Exchange Commission filings, including but not limited to the company's Annual Report on Form 10-K for the fiscal year ended December 30, 2007 and the company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2008. Unless otherwise required by applicable laws, the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
NOTE: Spansion(R), the Spansion Logo, MirrorBit(R), and combinations thereof, are trademarks of Spansion LLC in the US and other countries. Other names used are for informational purposes only and may be trademarks of their respective owners.