May 02, 2001
The sale follows an announcement in March, when Micron said it would exit the highly competitive PC sector to focus on its web-hosting business.
Gores Technology would buy Micron's PC business for an undisclosed sum. The business, to be called MicronPC, will continue to operate from its Idaho headquarters with its current management team.
"With growth rates in the PC industry plunging - dropping more than six per cent in the fourth quarter alone - and price wars by major competitors significantly reducing gross margins, the PC business is becoming a major drain on the company's cash reserves,'' said Joel Kocher, Micron's chairman and chief executive. "We've been trying to sell the business for several months, and as the industry has continued to worsen, it became clear that it was in the best interest of our shareholders to complete our exit rapidly, cut our losses, and focus on our growing web-hosting business," he added.
Gores Technology has bought 35 companies related to technology, and has more than $2bn in annual revenues.
"While there are clearly challenges ahead, MicronPC's strength in the government, small and medium business...provide significant opportunities for growth," said Vance Diggins, CEO.
Under the terms of the agreement, Gores will take on Micron PC's assets and liabilities, including $70m in working capital from Micron Electronics. The deal also allows Micron to share in the net proceedings of some sales and disposals of all or part of the PC business within 3 years of closing.
Micron was the 12th largest PC maker in the US in 2000 with a 1.3 per cent market share, down from 1.5 per cent a year earlier, according to Gartner Dataquest, a market research group.
On Tuesday shares in Micron closed the trading day down 3.53 per cent, to $43.78.
The deal is expected to close in 30 days.
