Auriga Maintains Buy on MEMC Electronic Materials After $700M Restructuring Plan

Auriga has published a research report on MEMC Electronic Materials WFR commenting on the company's $700 million restructuring plan. In the report, Auriga writes, "In a fit of rare decisiveness that was absent for the past two years, MEMC finally woke up from its slumber to gain cost/capacity flexibility in its business model with merciless restructuring at $700M, with ~$550M in additional charges for goodwill impairment ($200M to $400M) & unlikely realization of deferred tax assets ($200M to $300M). The $700M restructuring will impact both semiconductor and solar manufacturing (and will lead to idling/closure of 6,000MT Merano, Italy polysilicon facility, reduction in solar wafer capacity ramp at Kuching, Malaysia to 300MW vs. 600MW earlier, and Portland, Oregon capacity (amount unknown), reduce MEMC's workforce (by 20%), and lower operating costs by 15% in 2012 and beyond. The $700M restructuring charge breaks down as follows: $475M for manufacturing asset impairments; $175M for contract termination, $50M for severance; $520M of the restructuring charges are non-cash." Auriga maintains its Buy rating and $6 price target on MEMC Electronic Materials, which is currently trading at its $4.21 closing price from yesterday.