Micron dumping PC business; company to buy Interland and move to Atlanta
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NAMPA, Idaho - Micron Electronics, whose shares have fallen 81 percent in the past year, said it's quitting the personal-computer business and has agreed to buy Web-site manager Interland for about $130 million in stock.
The company, whose majority owner is No. 1 U.S. computer-memory chip maker Micron Technology, will change its name to Interland and move its headquarters to Atlanta from Nampa, Idaho, spokesman Dave Closs said. The company will have six data centers and 112,000 customers and operate more than 227,000 Web sites.
Micron Electronics has been moving into Web hosting to make up for falling personal-computer sales and lower prices for memory-chip products. A year ago, it bought Florida Web-site manager Worldwide Internet Publishing. "With the recent, drastic downturn in the economy and the PC industry, we have decided to focus our resources exclusively on growth opportunities in the hosting business," said Micron Electronics Chairman Joel Kocher.
Interland shares rose 38 cents, or 21 percent, to $2.13. Micron Electronics fell 31 cents to $3.13.
Micron Electronics said it plans to sell its direct-sales PC business, known as Micronpc.com, to a "large, private, technology-equity-investment firm." The terms weren't disclosed.
Micron Technology agreed to buy the other unit, known as SpecTek, and some real estate and intellectual property, Micron Electronics said. The company will receive about $42 million after paying profit-sharing obligations to Micron Technology, it said. SpecTek revamps and resells non-standard random-access memory chips.
Kocher will remain chairman and chief executive at the new company. Atlanta-based Interland Chief Executive Ken Gavranovic will become vice chairman. Interland shareholders will hold about 30 percent of the new company.
In its second-quarter results, announced yesterday, Micron Electronics posted a loss of $168.9 million, or $1.75 a share, compared with a profit of $5.72 million, or 6 cents a share, in the year-earlier period.
Excluding the PC business and SpecTek, the company's loss in the quarter ended March 1 would have widened to $9.7 million, or 10 cents a share, from $3.77 million, or 4 cents, a year ago. Sales more than doubled to $14.7 million from $6.58 million, the company said.
Micron Electronics had delayed its earnings report, which also pushed the release of Micron Technology earnings until next week. Analysts expect the big computer-chip maker to report a loss of 1 cent per share.
Material from The Associated Press was used in this report.