bit-tech.net

Elpida files for bankruptcy protection

Elpida files for bankruptcy protection

Elpida has filed for bankruptcy protection as it faces mounting debts and a stock price plummeting 95 per cent.

DRAM giant Elpida has confirmed its financial struggles, announcing that it has applied for bankruptcy protection with the Tokyo District Court.

The memory maker is facing mounting debts: according to figures released by the company in a press conference earlier this week, the total is in the region of ¥448 billion or around £3.5 billion.

Following the announcement, Elpida's stock plunged 97 per cent on the Tokyo Stock Exchange from ¥247 to just ¥7 per share. Analyst fear the company could fall still further: 'Elpida's shares are worth zero after the delisting announcement,' investor Mitsushige Akino told Businessweek following the drop.

The massive drop comes as rumours spread of a takeover by another memory maker. With Elpida's shares trading so low, the company is ripe for acquisition. Its high debt, however, may be too much for its rivals to take on while the memory market is still recovering from a pricing slump that saw DRAM wholesale value drop by 85 per cent.

Despite investor panic, the company has vowed to battle on. Asian technology news site Tech-On reports that Elpida will not be replacing its management team as a result of the anti-bankruptcy reorganisation. Whether that's a sound move or not only time will tell.

Should Elpida's reorganisation fail, it will represent one of the biggest bankruptcies to hit Tokyo in years. It would also leave a major gap in the DRAM market - one which competitors like Samsung and Hynix would look to fill. In 2011, Elipda held around 18 per cent of the global DRAM market, with Hynix holding 25 per cent and Samsung 39 per cent.

With DRAM prices expected to rise as stock is depleted and the PC market recovers from its slump following the recent hard drive shortage, it could be a bad time for Elpida to go under. If the company can hold on for the next few months, it may find its fortunes turning around.

4 Comments

Discuss in the forums Reply
Bede 29th February 2012, 13:40 Quote
I'll never understand how their shareholders didn't notice how ****ed they were for so long. I get that at least one major creditor must have called in their loan recently, but all this stuff should be available in their investor reports.
Bauul 29th February 2012, 13:50 Quote
Quote:
Originally Posted by Bede
I'll never understand how their shareholders didn't notice how ****ed they were for so long. I get that at least one major creditor must have called in their loan recently, but all this stuff should be available in their investor reports.

Companies can last for ages with huge debts and eventually sort themselves out.. A creditor could have called in the loan, but that may only have happened at the start of the week. Perhaps Elpida are trying to move as quickly as they can to prevent the company being put into administration.
Baz 29th February 2012, 17:48 Quote
Buy your DDR3 now!
nuc13ar 3rd March 2012, 13:52 Quote
why? i agree, bought two sets of 8gb (before newegg rescinded their policy of allowing postal money orders for payment), but still would like more info, if you really do know. thanks in advance. i am sorry for elpida. their memory was middle of the market, pretty decent ddr2 667 sticks...
Log in

You are not logged in, please login with your forum account below. If you don't already have an account please register to start contributing.



Discuss in the forums