The sale was reportedly due to accounting calculations, not because of a lack of confidence in the company.
Sources inform ''Globes'' that M-Systems Flash Disk Pioneers Ltd. (Nasdaq:FLSH) sold its 2% stake in Saifun Semiconductors Ltd. (Nasdaq:SFUN) a few days ago for $15 million in an off-floor transaction. The buyer is unknown at this time. M-Systems no longer has a stake in Saifun.
The Kfar Saba-based supplier of flash memory processors posted a capital gain estimated at $5 million on the sale. M-Systems bought its holding in Saifun in October 2000, and recorded the holding at a value of $10 million. Saifun CEO Boaz Eitan was a member of M-Systems’ board until December 2002.
Saifun develops technology to double processors’ memory capacity. Does M-Systems no longer believe in Saifun? Certainly not. The sale was reportedly due to accounting calculations, not because of a lack of confidence in the company. The investment in Saifun was not financial; M-Systems booked it as a fixed investment. Now that Saifun has gone public, M-Systems would have had to calculate the value of the holding every quarter, and compare the figure with the value in its books, which could affect its profit and loss statement.
M-Systems CFO Ronit Maor recently said, “Saifun has interesting technology that we’ll be pleased to use in the future.” The sale of the holding simply seems to be the result of a wish to avoid an accounting headache.
Published by Globes [online], Israel business news - www.globes.co.il - on December 20, 2005