Micron sells off PC unit to turnaround specialist

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Micron sells off PC unit to turnaround specialist

Micron Electronics today announced a deal to sell its money-losing PC business to a Los Angeles-based company that tries to turn around struggling technology vendors.

The agreement with Gores Technology Group comes six weeks after Micron disclosed plans to exit the PC market and refocus its operations on Web hosting services aimed at small and medium-sized enterprises. That decision followed a loss of $168.9m (£117.7m) in Micron's second financial quarter, which ended 1 March.

Under the terms of the deal, Micron will make an initial input of $70m of working capital to help fund the continued operations of the PC business. But it would then have no further obligations to finance the unit, with Gores assuming all assets and liabilities related to the PC operations. The sale is expected to be completed within 30 days, the companies said.

In a separate announcement, Gores said the business unit will retain the MicronPC name and continue to operate from its current facilities in Idaho, with its existing management team also remaining in place. Gores added that it has previously bought and managed a total of about 35 companies.

Joel Kocher, chairman and CEO of Micron, said in a statement that the softening in demand for PCs had turned the MicronPC unit into "a major drain on the company's cash reserves". The sell-off was the best option for Micron, "given the realities of the tough PC environment and our desire to conserve cash," Kocher said.

Micron is in the process of acquiring Interland, an Atlanta-based company that provides Web hosting services. Interland will be combined with Micron's own HostPro hosting business, and Micron said it expects the merged company to become profitable from an operating standpoint early next year and to have a positive cash flow later in 2002.

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