Jeremy Charette
06-22-2006, 03:00 PM
"Qimonda AG, a leading supplier of memory products that was carved out of Infineon Technologies AG on May 1, today announced that it was selected by Microsoft as a preferred, comprehensive supplier of graphics RAM for the Xbox 360™ video game and entertainment console from Microsoft . Qimonda will supply a significant share of 512Mbit GDDR3 (Graphic Double Data Rate 3) RAM for the Xbox 360 to Microsoft."
One rule to press releases: there's always more the story. Let's dig a little deeper, and find out what's really going on here. <!>
August 29th, 2005 (http://news.com.com/Infineon+to+supply+Xbox+360+memory/2100-1047_3-5844387.html)- Infineon announces that it has signed a deal with Microsoft to supply GDDR3 DRAM for the Xbox 360.
February 13th, 2006 (http://blogs.mercurynews.com/aei/2006/02/memory_chips_ar.html) - Dean Takahashi writes a blog post stating "Microsoft's shortage of Xbox 360 video game consoles is due in part to its decision to use a new kind of memory chip from a German company, Infineon Technologies, according to people who are familiar with the game box's design."
February 15th, 2006 - Shares of Infineon stock trade at 5-10 times normal volume, 5.08 Million shares in one day. Feverish trading continues for the rest of the week.
February 28th, 2006 - Infineon stock reaches a 14 day low, having dropped over 5% since Dean Takahashi's blog post.
March 30th, 2006 (http://www.qimonda.com/about/press/releases/INFXX200603-050.html)- Infineon issues a press release: "Infineon Technologies AG (FSE/NYSE: IFX) announced today another milestone in its strategic realignment. The carve-out of its memory products business group into a new company will be effective on May 1st, 2006..."
May 8th, 2006 - Infineon's stock price reaches a high of $12.78, up nearly 30% from the March 30th Press Release.
May 31st, 2006 (http://www.finanznachrichten.de/nachrichten-2006-03/artikel-6221091.asp)- Infineon CEO Wolfgang Ziebart tells journalists "'We want to give [Qimonda] its independence as quickly as possible...".
June 12th, 2006 (http://www.qimonda.com/about/press/releases/QAG200606-002e.html)- Qimonda issues the Press Release quoted at the beginning of this article, stating that it has signed an agreement with Microsoft to supply memory for the Xbox 360.
So what's going on here? The type of memory Infineon is making for the Xbox 360 is bleeding edge technology. Yields weren't as high as predicted leading up to and through the Xbox 360's launch. While no one at Microsoft officially confirmed that the GDDR3 memory caused the worldwide shortage of Xbox 360 consoles, the news linking Infineon caused fear and uncertainty in the minds of investors. Because of the unpredictable nature of the type of products which their memory division produces (in terms of lot yields, manufacturing costs, and consumer demand), Infineon saw the need to divest itself of that division in order to keep the shareholders happy. Qimonda was born.
Issuing a Press Release announcing a long term agreement to supply Microsoft with memory chips for the Xbox 360 helps both Infineon and Qimonda. Infineon can begin to distance itself from Qimonda, regaining it's former image as a stable and profitable corporation. Meanwhile Qimonda can demonstrate that it has steady long term demand for one of it's major products, boosting the confidence of potentail IPO investors. Qimonda management board member Thomas Seifert is quoted by Reuters (http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-06-12T112150Z_01_L09416664_RTRIDST_0_TECH-INFINEON-MICROSOFT-UPDATE-1.XML&rpc=66) as saying "This allows us to take volatility out of our business...".
All this because of one blog post written by a journalist in the know. That's the power of perception, strong enough to change the world's largest corporations.
One rule to press releases: there's always more the story. Let's dig a little deeper, and find out what's really going on here. <!>
August 29th, 2005 (http://news.com.com/Infineon+to+supply+Xbox+360+memory/2100-1047_3-5844387.html)- Infineon announces that it has signed a deal with Microsoft to supply GDDR3 DRAM for the Xbox 360.
February 13th, 2006 (http://blogs.mercurynews.com/aei/2006/02/memory_chips_ar.html) - Dean Takahashi writes a blog post stating "Microsoft's shortage of Xbox 360 video game consoles is due in part to its decision to use a new kind of memory chip from a German company, Infineon Technologies, according to people who are familiar with the game box's design."
February 15th, 2006 - Shares of Infineon stock trade at 5-10 times normal volume, 5.08 Million shares in one day. Feverish trading continues for the rest of the week.
February 28th, 2006 - Infineon stock reaches a 14 day low, having dropped over 5% since Dean Takahashi's blog post.
March 30th, 2006 (http://www.qimonda.com/about/press/releases/INFXX200603-050.html)- Infineon issues a press release: "Infineon Technologies AG (FSE/NYSE: IFX) announced today another milestone in its strategic realignment. The carve-out of its memory products business group into a new company will be effective on May 1st, 2006..."
May 8th, 2006 - Infineon's stock price reaches a high of $12.78, up nearly 30% from the March 30th Press Release.
May 31st, 2006 (http://www.finanznachrichten.de/nachrichten-2006-03/artikel-6221091.asp)- Infineon CEO Wolfgang Ziebart tells journalists "'We want to give [Qimonda] its independence as quickly as possible...".
June 12th, 2006 (http://www.qimonda.com/about/press/releases/QAG200606-002e.html)- Qimonda issues the Press Release quoted at the beginning of this article, stating that it has signed an agreement with Microsoft to supply memory for the Xbox 360.
So what's going on here? The type of memory Infineon is making for the Xbox 360 is bleeding edge technology. Yields weren't as high as predicted leading up to and through the Xbox 360's launch. While no one at Microsoft officially confirmed that the GDDR3 memory caused the worldwide shortage of Xbox 360 consoles, the news linking Infineon caused fear and uncertainty in the minds of investors. Because of the unpredictable nature of the type of products which their memory division produces (in terms of lot yields, manufacturing costs, and consumer demand), Infineon saw the need to divest itself of that division in order to keep the shareholders happy. Qimonda was born.
Issuing a Press Release announcing a long term agreement to supply Microsoft with memory chips for the Xbox 360 helps both Infineon and Qimonda. Infineon can begin to distance itself from Qimonda, regaining it's former image as a stable and profitable corporation. Meanwhile Qimonda can demonstrate that it has steady long term demand for one of it's major products, boosting the confidence of potentail IPO investors. Qimonda management board member Thomas Seifert is quoted by Reuters (http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-06-12T112150Z_01_L09416664_RTRIDST_0_TECH-INFINEON-MICROSOFT-UPDATE-1.XML&rpc=66) as saying "This allows us to take volatility out of our business...".
All this because of one blog post written by a journalist in the know. That's the power of perception, strong enough to change the world's largest corporations.