Lexar shares fall amid sale worries

NEW YORK — Lexar Media Inc. shares slid Tuesday, as the possibility of a higher price for the sale of the flash memory product maker diminished.

That happened after a Securities and Exchange Commission filing Tuesday and the company's unexpectedly weak first-quarter forecast.

Stock of Lexar, based in Fremont, Calif., fell 61 cents, or 6.6 percent, to close at $8.71 on the Nasdaq Stock Market. Tuesday's weakest level was $8.44.

On a 52-week basis, there was a low of $4.08 last April 18 and a high of $9.78 on Monday.

Lexar makes products such as memory cards and card readers for the digital photography, consumer electronics, industrial and communications markets.

Earlier this month, Micron Technology Inc. agreed to acquire Lexar in an all-stock deal that valued Lexar at $690 million, a premium of about 19 percent to its stock price at the time.

Since then, shareholders such as investment firm Elliott Associates and billionaire Carl Icahn have opposed the deal, accusing Lexar of not conducting a "robust and thorough sale process."

In a filing Tuesday with the Securities and Exchange Commission, Boise-based Micron said Lexar had conducted a thorough search for a buyer, although the other companies weren't named.

According to an analyst, the revelation seriously deflates the shareholder case that the company was being undervalued and had not conducted a serious search for a buyer.

"It looks like they engaged in a very fair process. They contacted many companies," CIBC analyst Daniel Gelbtuch said. "While they did not hold an official auction, they went through the appropriate steps of selling the company, considering the takeout price."

In a separate press release, Lexar also provided a first-quarter outlook below Wall Street's forecast.

Lexar said it expects to report a first-quarter loss between $22 million and $30 million on revenue of $100 million to $130 million.

Analysts surveyed by Thomson Financial had forecast, on average, a loss of $16.7 million on revenue of $199.8 million.

In the prior first quarter, Lexar had a net loss of $9.6 million, or 12 cents a share, on revenue of $232.4 million.

A Micron spokesman declined to comment on Lexar's results. He noted that Micron stands behind its offer for Lexar.