Infineon plan hits shares

July 2, 2001 Posted: 1602 GMT

LONDON (CNN) -- Shares in Europe's second-largest chipmaker Infineon fell as much as 4 percent after it announced a 1.7 billion euros ($1.4 billion) share sale.

Infineon said up to 60 million new shares would be offered on the Frankfurt and New York stock exchanges and the money would be used to fund capital spending, possible acquisitions and to pay down short-term debt.

The announcement comes after Infineon issued a profit warning last month, saying it would make a loss before interest and taxes of up to $600 million  because of drastic falls in chip prices

Infineon (FIFX) shares are currently trading near all-time lows at 20 percent below their 35 issue price last year.

The fall in the stock on Monday to as low as 26.75 suggested investors may not have the appetite for more shares in the face of dwindling profit prospects in the semiconductor sector.

The German chipmaker, which is 70 percent owned by communications and electronics group Siemens (SIE), also said on June 20 it expected revenue to decline by 30 percent in the third quarter, compared with the previous quarter.

Shares in Europe's No. 1 chipmaker ST Microelectronics, which itself issued a profit warning recently, also fell. Shares in the Italian-French company (PSTM) fell about 4 percent to 39.50 in Paris trading.

Infineon's share sale is being managed by U.S. investment bank Goldman Sachs and will take place on or around Friday, July 13, the company said.

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