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Tuesday, August 08, 2006

Infineon & Qimonda; A Bad IPO Is Getting Worse

yesterday we noted that the Infineon AG (IFX) spin-off of Qimonda (QI) was coming this week and not getting that great of reception. It was noted as "Not All Backdoor Plays are Created Equal." It looks like our "cautionary tale" may have even been polite. There has been discussion today that the $16 to $18 range is going to be either $13 to $14 or $14 to $15 per share. The real killer is that the company is lowering the share count as it is being reported that the underwriters couldn't sell all of the shares.

If these guys haven't pulled the deal entirely, they should do it immediately. Tech market strength comes and goes through time. That is particularly true for chips and DRAM companies where the company operates.

If Infineon has watched a performance from a certain VoIP name, then they would know what can happen if they try to force an issue. The other IPO at least had some decent hype behind it before they jammed it to the public. This Qimonda doesn't even have that going for it.

Shares of Infineon (IFX) are down almost 3% at $10.50 ahead of this decision. Unfortunately, the negative talk out there has just proceeded to get even worse.

Jon C. Ogg
August 8, 2006

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