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Flash memory maker Spansion sets IPO

The joint venture between AMD and Fujitsu eyes 35.3 million shares at about $16 to $18 apiece.

Flash memory maker Spansion on Friday set its planned initial public offering at 35.3 million shares.

The Sunnyvale, Calif.-based company, which is a joint venture between Advanced Micro Devices and Fujitsu, estimated that its class A shares will sell between $16 to $18 apiece. AMD and Fujitsu are currently the sole investors of Spansion and distributors of its products.

Spansion said it intends to have four classes of stock, with AMD owning 42.4 million class A shares and all of Spansion's outstanding class B shares. Upon completion of the offering, AMD will own roughly 40 percent of Spansion's outstanding stock.

Fujitsu will own all of Spansion's outstanding shares of class C and class D common stock. It will own roughly 26.7 percent of the total outstanding stock.

Along with the IPO, Spansion said it intends to issue up to $400 million in a private placement of senior unsecured notes.

Spansion said it estimates that it will receive $561 million in net proceeds from the IPO and $193 million in net proceeds from the sale of convertible preferred stock.

The company said it plans to use the funds for working capital, capital expenditures and general corporate purposes.

The stock will be listed on the Nasdaq under the ticker symbol "SPSN."

Citigroup and Credit Suisse First Boston are the lead underwriters for the IPO.

Papers filed with the U.S. Securities and Exchange Commission on Friday showed that the underwriters would have the option to buy an additional 5.3 million shares to cover overallotments.

The IPO announcement follows tough times for the company. Earlier this year, AMD said it would spin off Spansion in an IPO. But a recent spate of financial losses and a drop in market share made it .

According to Spansion's SEC filings, Spansion lost $128 million in fiscal 2003, $19.7 million in fiscal 2004 and $108.8 million in the first quarter of fiscal 2005.

For the quarter that ended in July, Spansion posted an operating loss of $90 million.

Spansion is also starting to feel pressure from Samsung and other companies as the different wings of the flash market----blur on the application side, most notably in the hotly contested mobile phone market.

"The NOR market is going to be a challenging market for companies like Spansion to succeed in," Gartner analyst Joseph Unsworth said. "The market is expected to decline in terms of revenue by 4.7 percent from 2004 to 2010. In addition to competitive pressures from NAND flash, competition is expected to intensify through aggressive pricing strategies in order to gain market share and profits in a declining market."

NOR flash is used for code storage in applications, most notably the cell phone and networking equipment. NAND flash is used for data storage primarily in USB flash drives, MP3 players and removable flash cards for digital cameras and mobile phones.

Reuters contributed to this report.