Infineon Spins Out Opto Group

The future of Infineon Technologies AG's (NYSE/Frankfurt: IFX) fiber-optics business unit is looking uncertain.

Word on the street is that the group is up for sale. The official line is that it is being "carved out" as a separate legal entity. The business is not for sale directly, says Infineon spokesperson Karin Braeckle.

Initially, the new entity would be fully owned by Infineon, but this is clearly a move that makes it simpler for the parent company to sell all or part of its ownership in the future. Indeed, Infineon is already advertising for strategic partners "to maximise the value of the business."

"We intend to still hold a stake in the new company," says Braeckle. "But [once we find a strategic partner] we will have fifty percent or less."

Infineon revealed its intentions in a recent earnings press release, but they were buried in the twenty-second paragraph (see Infineon Reports Mixed Q1 Results).

The "carving out" process should be finalized by the end of March, according to Braeckle. Infineon expects to find a partner for the new company before September 30, the end of its 2004 fiscal year.

Infineon's fiber optic business unit mainly makes transceivers for the access and metro markets, a market segment that is coming under extreme pricing pressure. Revenues for the company's wireline communications group, of which fiber optics is a part, declined 12 percent sequentially for the quarter ended December 31, and blame for this landed squarely on fiber optics.

"Infineon has been a holdout to spin out its transceiver business, hasn't it?" writes Tom Hausken, director for optical components with Strategies Unlimited, in an email to Light Reading. "Lucent/Agere, Nortel, and Alcatel already spun out and sold their opto components businesses. Even Hitachi spun out its opto group into OpNext." Infineon says it's too early to discuss potential partners (i.e., buyers) for the fiber optic business. The big question is who that might be.

"Perhaps suggesting Bookham is too obvious," writes Hausken. "Bookham is a fellow European company that could use Infineon's product line to fill out its own. [But] there's no reason to believe that the new owner would necessarily be one of the existing players. If someone thinks Infineon is a good investment, the investor might take it on as a separate company and build from there. It all depends on the price."

— Pauline Rigby, Senior Editor, Light Reading

Curious George 12/5/2012 | 2:25:30 AM
re: Infineon Spins Out Opto Group The automotive transceiver group is probably one of the better business elements. They are shipping high volumes to the major high-end manufacturers, dominating a market that will eventually ripple broadly (similar to anti-lock brakes). They have a leading, very cost effective technology. Quite likely the same technical approach could be applied to optical IEEE 1394 Firewire and other high speed consumer interconnects.
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