Compaq, Micron deal heating up

The on-again, off-again negotiations over the sale of Micron Technology's computer manufacturing subsidiary to Compaq are again heating up, according to sources.

Earlier this spring, the two companies discussed a sale of Micron's division, Micron Electronics Inc., which sells computers via mail order. But the talks broke off when sources said the two sides failed to agree on a final price.

However, sources say the talks have resumed and that the two sides are very close to an agreement. One source close to the negotiations said a deal had actually been agreed upon Tuesday, a claim that could not be independently verified. Micron, based in Idaho, US, has actively shopped the unit around, according to the sources, and at various times discussed a sale to Gateway 2000 and Hewlett-Packard.

Spokesmen for Compaq and Micron were not immediately available for comment.

"If there's any chance of leakage, they would want to get it out the door pretty fast," said Mark Specker, an analyst with SoundView Financial Group in San Francisco, US. He added that Micron had put its PC unit "on the block." Separately, Compaq's CFO Earl Mason earlier today said the company, based in Houston, US, was enjoying a "great" quarter and was comfortable with Wall Street's expectations.

The news drove up shares of Compaq, which closed Friday at $108.13, up $6.38.

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