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June 16, 2006 Stock Pick: Spansion, Inc. (SPSN)

Stock Price: $13.90

Spansion, Inc. designs and manufactures flash memory, specifically NOR flash memory. The company was spun out of AMD and Fujitsu last December.

Spansion specializes in integrating NOR flash memory into wireless and embedded devices. The biggest market for their chips is use in cell phones with use in DVD players, MP3 players, and digital cameras as well. SPSN is the leader in the NOR flash memory space slightly ahead of Intel.

We believe the market over reacted to the company's most recent debenture financing of $180 million at 2.25%.

There are 128 million SPSN shares outstanding and 47.18 million shares in the float. SPSN recently dropped from above $18.00 down to just below $13.00 and has rebounded the past two days. It would not be surprising to see SPSN move back above $17 or $18 in the very near term. However, $13.90 is a great entry point for the long term.

Spansion has big plans marked by an announcement Wednesday by the company to build a new $1.2 billion flash memory manufacturing plant. It would just take one major partnership to really move SPSN. This company has the opportunity to become the major player in the flash memory space.

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