Needs to make more product
Memory maker Elpida saw its shares tumble after it announced it wanted to raise $987 million by selling shares and convertible bonds. The chipmaker plans to sell 57.3 million new shares which is equivalent to 27 percent of Elpida’s outstanding stock.
Elpida, bailed out by the government in 2009. It’s the unprofitable company’s sixth fundraising plan since 2009. The outfit needs to invest in factories to keep up with Samsung.
However analysts think that the company is flogging too many shares and that it will dilute the value of what it has on offer. Elpida specializes in DRAM which is an industry where companies driven out of the business by low-cost competitors and cycles of boom-and-bust. The last recession killed off German memory-chip maker Qimonda.