SCHLUMBERGER <SLB> MAY HAVE ALTERNATE BUYER
Schlumberger Ltd most likely has an
alternate buyer lined up for its Fairchild Semiconductor unit,
Wall Street analysts said.
    "I think its clear that in cancelling its agreement with
Fujitsu, Schlumberger has signaled that it has another deal in
the works," said Paul Johnson, a semiconductor analyst with
L.F. Rothschild.
    "There are unquestionably other buyers out there," added
Kidder Peabody analyst Adam F. Cuhney. "A lot of companies have
looked at Fairchild and would be willing to buy it."
    Among the companies that would be interested in bidding for
Fairchild are Advanced Micro Devices <AMD>, Sunnyvale, Calif.,
and LSI Logic Corp <LLSI>, Milpitas, Calif., industry analysts
said.
    Top U.S. chipmakers like National Semiconductor Corp <NSM>,
Texas Instruments Inc <TXN> and Motorola Inc <MOT> might also
seek to buy Fairchild, but could possibly run into antitrust
problems, the analysts added.
    Moreover, Fairchild's management is thought to be
considering proposing a leveraged buyout of the Cupertino,
Calif., company, analysts said.
    In a brief statement announcing the termination of the
agreement with Fujitsu, Schlumberger said the decision opened
up other possibilities, including a possible buyout by
Fairchild management.
    The company said it ended the deal, in which Fujitsu would
have bought 80 pct of Fairchild for an estimated 200 mln dlrs,
because rising opposition to the deal by the Reagan
administration made it unlikely that the sale could be
completed within a reasonable period of time.
    Analysts questioned this explanation, however, arguing that
the companies did not need government approval to complete the
transaction. Both Schlumberger and Fujitsu are foreigned-owned
companies.
    "Schlumberger would not have terminated the deal because
the U.S. government didn't want it," said Johnson of L.F.
Rothschild.
    A spokesman for Schlumberger declined to elaborate on the
company's news release.
    He said only that the company was reviewing a number of
possible alternatives for the Fairchild unit.
    Officials at Fairchild and Fujitsu were not immediately
available for comment.
    Analysts noted the significance of the government's
apparent success in preventing Fujitsu from taking control of
Fairchild.
    Administration officials, including Commerce Secretary
Malcolm Baldrige and Defense Secretary Caspar Weinberger,
feared that the sale to Fujitsu would lead to Japanese control
of key semiconductor technology for supercomputers and military
weapons systems.
    "The government really stood up for the semiconductor
industry," said Johnson of L.F. Rothschild. "That, I think, is
the real significance of this."
    Consequently, analysts said, the Japanese government might
now feel more pressure to address U.S. complaints about
Japanese chipmakers' violation of the semiconductor trade
agreement signed last summer.
 Reuter
