Freescale, the $4.4 billion global semiconductor company, filed a Form S-1 Registration Statement on February 11, 2011 indicating its intention to file for an initial public offering. The potential offering, which VDC predicted in a separate June 2010 blog, calls for the issuance of over 1 billion shares of common stock at an as yet undetermined share price in an effort to reduce a significant portion of its consolidated indebtedness, totaling approximately $7.6 billion at the end of 2010.
VDC sees Freescale, which lost $1 billion for the year ending Dec. 31, 2010, also leveraging this IPO to improve its strategic flexibility. Historically, technology companies that operate in competitive environments often struggle to move beyond large debt burdens which can limit strategic flexibility.
By having a significant cash-generating event, Freescale can reduce its debt and more easily fund new R&D efforts, new product development, expand product marketing campaigns, and compete with Intel to better target potential acquisitions. With significantly less debt, VDC believes Freescale can enhance its (1) flexibility for planning and exploiting opportunities and (2) adjusting more quickly to changes in the fast-moving semiconductor industry.