Feb 25, 2008
Executives
James Kim - Chairman and Chief Executive Officer Joanne Solomon - Chief Financial Officer Kenneth Joyce - Chief Operating Officer
Analysts
Christopher Blansett - J.P. Morgan Timothy Arcuri - Citigroup Peter Kim - Deutsche Bank Securities Satya Kumar - Credit Suisse Thomas Diffely - Merrill Lynch Bill Ong - American Technology Research Dave Egan - Lehman Brothers Jeff Harlin - Lehman Brothers Robert Hopper – UBS Jake [Kemini] - Morgan Stanley Patrick Wong
Operator
Welcome to the Amkor Technology, Inc. fourth quarter earnings conference call.
During today’s presentation, all parties will be on a listen-only mode. Following the presentation, the conference call will be open for questions.
This conference is being recorded today, Wednesday, February 13, 2008 and will run only for one hour. Before we begin the call, Amkor would like to remind you that any forward-looking statements made during the course of this conference call represents the current view of Amkor Management.
Prior to this conference call, Amkor’s fourth quarter earnings release was filed with the SEC on Form 8-K. The earnings release together with Amkor’s other SEC filings contain information on risk factors, uncertainties, and assumptions that could cause actual results to differ materially from Amkor’s current expectations.
I would now like to turn the conference over to Mr. James Kim, CEO and Chairman.
Please go ahead, sir.
James Kim
Thank you and good afternoon. This is James Kim.
With me today is Joanne Solomon, our Chief Financial Officer and Ken Joyce, our new Chief Operating Officer. Our strong fourth quarter performance demonstrates that our business model is working.
Looking forward, our strategies are intact. We continue to enrich our product mix, leverage our advanced packaging technologies, maintain a disciplined approach to capital spending, and proper execution at the factory.
I will include the cash flow and the liquidity position to provide us with a greater flexibility to respond to new growth opportunities as well any potential downsize adjustment in the semiconductor industry or general economy. We are prepared to prudently invest in a support of our customers needs for leading-edge packaging and test solutions.
We are expanding our wafer bumping capacity and continue to invest in the flip chip, 3D packaging, and test. We expect the fourth quarter sales to be near the peak levels we saw for the third quarter of 2007.
However, in view of record sales in the fourth quarter of 2007, we expect the first quarter 2008 sales to be down 7% to 9% which is generally in line with the seasonal expectations. During the fourth quarter industrialized packaging and test capacity remain tight and our unit demand was up 4.2%.
While unit demand has fluctuated from period to period, there has been a historic upward trend which has driven our growth and the semiconductor industry. The semiconductor industry cycles have been increasingly correlated with the movement of worldwide GDP.
Global consumer spending has had a greater influence in the semiconductor industry cycles. While uncertain economic times may interrupt our growth, we will continue to pursue growth opportunity in areas where we have competitive advantage and solid return on investment.
Joanne Solomon will now review our fourth quarter operating performance.
Joanne Solomon
Thank you, Jim. We exceeded both our sales and profitability targets in the fourth quarter of 2007 with stronger than expected demand for both our packaging and test services from some of our largest customers primarily in support of high-end wireless communication, computing, and gaming applications.
Our gross margins were over 200 basis points better than expected and EPS was $0.16 above the high-end of our guidance. Majority of the unexpected demand was driven by the strength of our advance technologies including flip clip, 3D packaging, and test.
Fourth quarter net sales increased 8.4% sequentially while unit shipments increased 4.2%. Unit volumes were higher across most of our product lines.
Fourth quarter 2007 sales reflect the benefits of the shift in our product mix and the increasing importance of our advanced packaging technologies. Pricing was generally stable during the fourth quarter; however, prices for packaging and test generally declined over time.
We continued to experience some price reductions on select package types as we share in the benefits of our ongoing bioengineering efforts with our customers. Gross margin in the fourth quarter of 2007 was 27.2%.
Improvement reflects the operating leverage of higher revenues and the enriched product mix. Net interest expense for 2007 decreased $31 million from 2006 reflecting the results of our ongoing debt reduction efforts and selective refinancing of high cost debt in prior periods.
At the end of this week, we will repay $88 million of senior notes and repay approximately $64 million of maturing debt held by our subsidiaries throughout 2008. Total debt at the end of 2007 was $1.8 billion down $241 million from the prior year.
Our cash balance at the end of 2007 was $410 million. Effective income tax rate for 2007 was 5.4% and we anticipate an effective tax rate of approximately 10% for 2008.
This increase is primarily attributable to the full utilization of net operating loss carry-forwards and tax credit carry-forwards in Taiwan. We generated $367 million of free cash flow in 2007.
This is an increase of $159 million from 2006. Although we currently expect to be free cash flow positive for the first quarter of 2008, we expect free cash flow will be significantly decreased sequentially reflecting the higher levels of capital additions in the fourth quarter of 2007 which were paid in the first quarter of 2008 and the lower levels of revenues.
Here is a recap of our first quarter 2008 guidance contained in our earnings release. We expect first quarter sales to be down 7% to 9% sequentially from the fourth quarter of 2007.
We expect gross margins in the range of 24% to 25% and we expect net income per share to be the range of $0.25 to $0.29 per diluted share. Nicole, we will now open this call for questions.
James Kim
Operator?
Operator
Yes, thank you. Our first question comes from the line of Chris Blansett.
Please state your company followed by your question.
Christopher Blansett - J. P. Morgan
J. P.
Morgan. Thanks.
I appreciate the question. I remember speaking to Ken in the past year, based with the expectations he indicated that the margins would probably peak out in the mid 20s, so obviously you’re above that.
So what has changed since that time frame and should we potentially look at better peak margins going forward?
Joanne Solomon
Chris, thanks for the question. It’s always hard to call what a peak is.
So really we’re guiding Q1 revenues to be down seasonally so our gross margin expectation will come down as well. So we are turning higher gross margin levels for the future.
Product mix, revenue volumes, the pricing environment, all contribute to gross margin fluctuations. If we look at 2007 as a percentage of revenue, materials was about 38%, direct labor was about 16%, and depreciation was about 8% and the other costs were about 13%.
If we continue our prudent investment strategy, depreciation will be test in check. The benefit of spreading this cost over a larger revenue base will benefit our gross margins.
So continued favorable quarters like Q4 ’07 will definitely yield opportunities [refer] to gross margin expansion.
James Kim
Chris, this is Jim, I like to add there again. The really important part of utilization, with the fixed investment a given time and then suddenly customer demand increases or loading increase, obviously our margin will improve.
The secret is how we do that every quarter.
Christopher Blansett - J. P. Morgan
Kind of along those lines, if you assume your product mix stays constant, do you have a peak amount of revenue you can generate today, if you can give us a number on that or an idea?
James Kim
I would say we could get up probably today I have a capacity of $760 million, something like that maybe even higher if everything is perfectly done.
Operator
Thank you. Our next question comes from line of Timothy Arcuri.
Please state your company followed by your question.
Timothy Arcuri - Citi
Citi. Thanks.
Joanne, what do you think that the variability is going to be on gross margin as revenue scales down here… certainly in Q1, I guess I’m looking even beyond Q1. I go back to my year-over-year end analysis, if you look at in the Q2 and if revenues were down again in Q2 and they were down, say a material number, say 5% to 10%.
What’s the variability will there be on the margin line?
Joanne Solomon
Most of our costs tend to be fixed except for materials and as I said materials is about 38% as a percentage of revenues. So on the downside labor, utilities, depreciation, tend to all be fixed.
So, on the downside you do see decrements to gross margin, higher than we experienced going on the upside. As Jim said, with respect to depreciation, assuming we continue on investing prudently and assuming we can get good utilization then that’s where we get the benefit on the operating leverage.
Timothy Arcuri - Citi
Okay. So I guess if I specifically look in the first quarter of ’07, that was the second quarter of two straight down quarters in revenue and about $650 million, you were doing about 22.5% gross margin.
Is there any reason to believe that the margin, if you had the same volume of revenue in June that the margins would be much different than that or is it the same sort of cost structure now as it was then?
Joanne Solomon
The cost structure is always evolving and as you said, I mean you have to make some pretty big assumptions like mix, to the extent we continue to add capacity that does increase our overhead. So while I would start with that Q2 level you would have to add in our CapEx spending for the year.
Operator
Thank you. Our next question comes from line of Peter Kim.
Please state your company followed by your question.
Peter Kim - Deutsche Bank
Hi, Deutsche Bank, thanks for taking my question. First, I want to ask about capital intensity.
In the past you’ve talked about capital intensity being no more than 12% to 13% max and now the range seems to have expanded a little bit, between 11% to 14%. Had there been a material change in your view with regard to capital intensity in the recent past?
James Kim
Not really, except as I said as we’re going to the bumping area which is the extension of wafer [inaudible] foundry, investment is becoming more likely a step like lump instead of [inaudible] you can have fresh and we can increase. I think that’s the reason why we have to expand.
If we’re going to expand in the bumping area, I think that percentage may slightly increase. That’s the only reason, the rest of them are fairly variable.
Peter Kim - Deutsche Bank
So, if you… today as you look out into the next few quarters into 2008, has your view of demand for flip chip capacity changed?
James Kim
Well, market is demanding. Demand is increasing at, I will use the worst, exponential way.
So we have to prepare and I think market has set the price as the strength demand in the market, certainly the allocation at this time.
Operator
Our next question comes from line of Satya Kumar. Please state your company followed by your question.
Satya Kumar - Credit Suisse
Yeah, thanks, Credit Suisse. Good results here guys.
In terms of overall performance you guys are seeing we look at your competition in Taiwan, you almost are outperforming them 10 percentage points between Q4 and Q1. Has there been any improvement in the last few weeks in the business in terms of your guidance for Q1?
Do you think that you’re taking some share in terms of what you’re doing in the next couple of quarters?
James Kim
I don’t think that has anything with the share, I really think overall, market has been steady. If you look at last two years, Q1 has been always been so much lower but this year we have a much higher level.
That’s the only difference but that’s true of everyone, I believe.
Satya Kumar - Credit Suisse
Okay. In Q4 last year, you guys did $746 million and I think you mentioned that you your run rate right now is $750 million.
Were you earning a basically peak utilization rate in packaging basically last quarter? What was the utilization rate?
James Kim
It depends on what you mean by really capacity, we’re running at about 86% to 88%.
Joanne Solomon
89%, I think it was.
James Kim
89% that’s pretty full, always under special circumstances you can get up higher than that but we are running pretty full unless everything is perfectly aligned.
Satya Kumar - Credit Suisse
Okay, but from Q4…
Joanne Solomon
Let me correct that, Jim was right we’re at 86% utilization.
Satya Kumar - Credit Suisse
86% utilization in Q4, right? So a year-over-year basis from Q4 last year to Q4 this year or if I take just a mid-point of your CapEx and knowing that it’s a bit more [inaudible] operated, how much can you grow your unit capacity by from Q4 to Q4?
James Kim
You’re talking this year?
Satya Kumar - Credit Suisse
Yeah, this year from Q4 ’07 to Q4 ’08. What sort of unit capacity expansion can we get?
Joanne Solomon
I mean there’s still part of that unit is… We could do a lot of [inaudible] units and it’s a big number, more as we would rather do less units of our advanced technologies like our stacked CSP, our PoP, our flip clip, and there’s a lot less units but it’s currently a lot better business for us. I mean if you look at our results, we did okay on units but we did better on top line revenues.
So the reality is while units are very important to us, we’re driven by units…
James Kim
Our product mix is very important.
Joanne Solomon
Mix becomes a greater…
James Kim
And as you do the bumping, remember we start talking about wafers now, how many wafers we are doing.
Operator
Our next question is from the line of Tom Diffely. Please go ahead with your question but please state your company name first.
Tom Diffely - Merrill Lynch
Yes, Merrill Lynch, thank you. Getting back to the mix, you noted that there was some strength in the high-end wireless, computing and gaming markets.
What’s your view for those three markets in the first quarter then for the balance of ’08?
James Kim
First quarter, still strong, in fact we are seeing no degradation other than normal seasonal downturn. Again the overall, very difficult to give you projection.
As you know it all depends on the world economy as I stated but all the numbers indicated world economy is going to be somewhere between 3.5% to 4% area. Our position there actually is not 4.5% but I think we’ll continue to see the growth.
Tom Diffely - Merrill Lynch
Yeah. Of the strength you saw on the fourth quarter, was that new customers or that just growth on existing customers?
James Kim
Same customer base.
Tom Diffely - Merrill Lynch
Okay, kind of an accounting question here. When you look at the repayments you’re going to make over the next couple of quarters, what do you expect the impact will be on the interest expense line?
What do you see at the end of the year?
Joanne Solomon
Based on current interest rates and some of our debt is variable, I’m assuming the current debt levels, we expect our net interest expense for 2008 will be approximately $18 million lower than 2007. So again that reflects the $88 million repayment at the end of this week and the $64 million of amortized in debt to subsidiaries.
We will certainly always opportunistically look at open market debt repurchases from time to time as one of the possibilities that were cash and that would bring that number down as well.
Operator
Our next question is from the line of Bill Ong. Please state your company followed by your question.
Bill Ong - American Technology Research
Sure, Amtech Research, and congratulations, nice quarter.
Joanne Solomon
Thank you.
Bill Ong - American Technology Research
On your CapEx guidance of 11% to 14% revenue, do you have any internal extra dollar that you have in mind and that the 11% to 14% it just depends on how the revenue falls out? And maybe take it another way, your revenues are better than your internal forecast, would your CapEx be closer towards 11% of sales or closer towards the 14% of sales?
Joanne Solomon
Okay, so the reason why we switched to a percentage for capital intensity is because CapEx decisions are so tied to what the future business is that we thought that that was actually a fair representation. We each put out there an absolute dollar target that we would manage to but that didn’t really give us the adaptiveness that we needed to be flexible in to the market.
So it does go to revenues, obviously if we’re having a gangbuster year it’ll be closer to 11%. If things were tighter in 2008 it will be closer to the 14% and that study is one of the reasons why that range is wider.
James Kim
Well, let me add something again. Remember, 2.5 years ago, Amkor had a terrible balance sheet and we were in a lot of financial difficulties so we needed a much tighter financial discipline at that time.
With CapEx we gave you a number because that’s all we can afford but now that as I stated, we have considerably improved our balance sheet and our needs for customers needs are increasing. So I’m sending a new message, that is I’m willing to now look at the revenue that we’ll be more, I wouldn’t say aggressive, but more constrained but still within the percentage of our revenue increase.
We’re going to increase the dollar spending.
Bill Ong - American Technology Research
Okay, great. Thanks for the clarification.
Operator
Thank you. Our next question comes from the line of Dave Egan.
Please state your company followed by your question.
Dave Egan - Lehman Brothers
Ah yeah, Lehman brothers. Could you talk a little bit about the product mix?
If we look at the disclosure you gave today which was a little different from before and thank you for that, it’s helpful. It looks like that your traditional lead frame business was down considerably for the year.
Your laminate business has become sluggish, a little bit of growth. Flip chip grew considerably and then test grew at an okay level.
Is that correct and then how do you see that going forward and then in terms of those package segments or business opportunities? And how do you see that evolving to affect your revenue growth in 2008?
James Kim
Essentially, I think product mix wise, I think the way you described will continue. I agree lead frame will be under pressure but relatively speaking other areas are going to continue to grow.
More and more will have a turnkey business as we go to the flip chip areas and bumping, so probably test portion could increase by a little bit.
Joanne Solomon
I mean the only thing I would add to that is I would expect that we would see some more growth coming out of that laminate, the wirebond laminate. There’s some specific things in there with respect to modules and others that dampened the growth that we did actually experience in laminate.
And like Jim said, lead frames, part of that is our older legacy lead frame products are running their course to end-of-life and for those legacy products, we want to redeploy those assets to drive the efficiency but it’s really a game of trying to generate as much cash flow and keep the margins intact while there’s some shift in their technologies.
Dave Egan - Lehman Brothers
Okay just one followup to what you just said there. You said that laminate experienced some slower growth due to some modules.
Are you referring to earlier in the first half of the year that you talked about losing a design that one of your wireless customers and that as we look on a year-over-year basis, that will no longer be in your numbers and perhaps will come back in 2008?
Joanne Solomon
Yes, that is accurate. So if you look at that wirebond laminate line, it increased only 4%.
If you normalize it for that modules business that we talked about in the first half of the year and some other specific things as we migrated our product line from one factory to another, that number would have been more like an 8% growth.
James Kim
The margin of business, I think maybe I have given not a correct date. It will come in that will be 2009 in factory because of the design cycle time.
We will see something in fourth quarter but most likely most of the new designs will come in 2009.
Operator
Thank you. Our next question comes from the line of Timothy Arcuri with Citi.
Please go ahead.
Timothy Arcuri - Citi
Hi, I just have a quick followup. Joanne, what do you think that net interest expense will be in March?
Joanne Solomon
In March? I’ll just consult my trusty notes, around $29 million.
Timothy Arcuri - Citi
Okay.
Joanne Solomon
That’s all for the quarter of March not just the month of March.
Timothy Arcuri - Citi
Right. Okay, and then I guess, Jim, if you look year-over-year at your units and you look year-over-year at the revenue, they both grew about 9%.
So it looks like maybe there’s some offset mixes, basically offsetting some pricing pressure in your legacy business. So do you think going forward that through ’08 into ’09, do you expect a similar dynamic where the revenue should grow in line with the units, with the mix basically offsetting the legacy pricing pressure?
James Kim
I think you’re correct. I think that’s the way I see it, yeah.
Timothy Arcuri - Citi
Okay, thanks.
Operator
Thank you. Our next question comes from the line of Jeff Harlin with Lehman Brothers.
Please state your question.
Jeff Harlin - Lehman Brothers
Hi. I was wondering if you can talk about your deployment of free cash flow this year with respect to debt reduction versus acquisitions, other internal growth opportunities.
Joanne Solomon
We always look at our uses of cash as a waterfall. Our preference is always to invest first into the business and then we’ll set aside any contingencies that we need to set aside and then address our capital structure.
I don’t know if you’re asking about specific guidance with respect to free cash flow for the year.
Jeff Harlin - Lehman Brothers
No, I think it’s more just… what would you look at other some acquisition opportunities you see in certain related areas to someway test or other investments that you haven’t talked about because you have talked in recent quarters about maybe looking a little bit more than internal growth and gross.
Joanne Solomon
Yeah, internal growth is always easier than acquisition. Acquisitions bring a whole host of problems with it but so far from time to time we do evaluate an acquisition, but it is our policy not to comment on rumors and speculations, not that I’ve heard of any but…
Jeff Harlin - Lehman Brothers
Okay and your current level of leverage, I assume, that’s the level you’re comfortable with. Is that?
Joanne Solomon
It is a level I’m comfortable with. Our reputation is being highly leverage, is getting to be a little bit dated.
We are a highly leverage company but not overly so. We always talk to different investors and investment bankers about what’s optimal capital structure and we run our own capital with lots of pricing models.
It’s hard to say what’s optimal because you have to make so many assumptions with respect to volatility and I think we’re getting to the level especially when you consider it at about $290 million to convert that we’re at or near optimum. That’s on a net debt basis.
James Kim
So on that basis I still like to… again, this is internally we are continuing with the discussion because the way we were a couple of years ago, I like to get to a net debt of $700 million or so, the ideal.
Operator
Our next question comes from the line of Dave Egan with Lehman Brothers. Please go ahead, sir.
Dave Egan - Lehman Brothers
Yes, one followup question. There was an earlier question suggesting that your 2Q revenues were going to be down.
Could you talk a little bit about how you see the second quarter in overall 2008? Do you think that you’ll actually see growth in 2008, say a 5% level, 5% to 10%?
James Kim
I remember someone did say something about lower Q2. I don’t know who said it but no really we’re not giving any guidance to Q2 but historically speaking, you have to look at historically, Q2 is not a bad quarter.
Last year, however, we had Q2 to be flat with the Q1 or slightly up maybe. I don’t expect any downside, frankly.
I don’t think I can give you any guidance.
Dave Egan - Lehman Brothers
That’s fine, thank you.
Operator
Our next question comes from the line of Robert Hopper. Please state your company followed by your question.
Robert Hopper - UBS
Hey, UBS. Got a couple of questions.
First one, I just want to go back to what Jeff asked before. In terms of acquisitions when you look at your liquidity, just thinking about instead of acquisitions of other measures, what about other opportunities out there for you to expand your capacity to 86% by acquiring some customer facilities.
It’s maybe to talk about what the opportunity and how you differentiate between those opportunities versus acquisitions of other companies and if those opportunities actually exist in this market.
James Kim
Again, remember we have tried to go leading-edge area, product area which requires new investment and today whole market is now location. There isn’t that opportunity that exists, as far as I know there has not been.
Other older product area, we are not terribly interested in looking at it. That’s not where we are, our strategy is to go to leading-edge technology, leading-edge advanced packaging.
Robert Hopper - UBS
Okay.
Joanne Solomon
If the price is right and we need the equipment, it’s no different than finding used equipment. It’s really not an acquisition, it’s an ongoing business.
Robert Hopper - UBS
Right but it doesn’t sound that it’s the direction that you planned ahead, technology perspective.
Joanne Solomon
We evaluate all investment opportunities so, if the customer contacted us tomorrow and if it’s compelling, and at the right price, we’ll certainly run the numbers.
Operator
It looks like we have a followup question from Robert Hopper with UBS.
Robert Hopper - UBS
Hey, just thought it’s you who’s been having a problem getting cut off with conference calls lately. Just on your restricted payment basket if you could sort of give me an idea what within your bond is the most restrictive basket at this time, potential bond or equity buy backs?
Joanne Solomon
So with respect to our basket for restricted payments, the most restricted one we have is the one that we’re about to pay off at the end of this week. Once that is tasked we do have restricted payments basket and it’s probably in excess of $200 million so it’s not all that restricted.
Robert Hopper - UBS
Okay and then last one just there [inaudible] this one but on Oleg he was a, I guess in the eyes of a lot of people, leader of the change that took place. Maybe just comment on the departure and just where the business stands, where he’s left it, where you guys are from a, I guess, from a bench perspective, management level.
James Kim
I love to comment, Oleg has been a great team player but Oleg has received the tremendous offer from his new company that he just couldn’t turn down. He’s a young man.
We have parted amicably and certainly wish him very well. I have great confidence, however, in Ken as the new COO and we believe that we have very talented and deep management team here at Amkor so I have a lot of confidence in our team.
Operator
Thank you. Our next question comes from the line of Dave Egan with Lehman Brothers.
Please go ahead.
Dave Egan - Lehman Brothers
Just a question about OpEx. In the fourth quarter if I remember correctly, you guided to maybe $65 million to $66 million or something like that and you came in at $62 million.
So that I believe that’s lower than what was talked about on the call. Could you just explain what happened there and then what’s more importantly how should we be thinking about OpEx both R&D and SGA forward 2008?
Joanne Solomon
Thanks Dave, yes. SGA for the fourth quarter was down slightly, I guess about $2 million sequentially.
We do expect that that trend will reverse for the first quarter of 2008 SGA. We were expecting SGA to be about 5% higher and that’s going to reflect our ongoing globally European implementation and increased legal costs.
For the balance of the year SGA will continue to be impacted by both those elements. I’m sorry to expect SGA to be at a higher level for 2008 and 2007.
Dave Egan - Lehman Brothers
Okay. Can you give us an idea of what we’re talking about here?
I mean if we modeled $65 million to $66 million, would that be a fair number?
Joanne Solomon
To add to what I just said, if you could start with doing 5% up from Q4 to Q1 and then keep it at that level.
Dave Egan - Lehman Brothers
Flat out across the year then from there?
Joanne Solomon
Yeah, that’s an okay.
Dave Egan - Lehman Brothers
Okay. R&D, is that $10 million to $11 million a fair number or should we just pick it up a little bit to $12 million just to be conservative?
How do you think it will matter?
Joanne Solomon
R&D is driven by specific opportunities, so I would trigger it off of revenues and track that way.
James Kim
I think $11 million is about right, isn’t it?
Operator
Thank you. Our next question comes from the line of Jake [Kemini].
Please go ahead.
Jake [Kemini] - Morgan Stanley
Hi, Jake [Kemini], Morgan Stanley. I just wanted to get back to the comments about the ideal level of net debt.
I think currently the net debt’s roughly at $1.5 billion, so to get to $700 million, is there like a time frame that you’d be looking to get there and would you consider doing any share repurchases along the way considering that the free cash flow of the company has gone extremely stable in the last several quarters?
James Kim
I think it’s premature for me to really answer that. I will not get there first really so, yeah, we are internally debating.
In fact we did discuss at the border level about the kind of thing you’re suggesting but I feel a lot more comfortable in this environment to look into our capital structure from moreover deducing that but who knows we shall wait and see. I really think our consistent performances really matters at this time.
Jake [Kemini] - Morgan Stanley
But to get that net debt level down to $700 million, do you anticipate just building cash or you’re going to actively work on reducing that and over what kind of time frame is that $700 million level.
James Kim
That’s really more of a CFO function. You have really to look at the interest rate… how the market is.
If we see very huge discount in the market, obviously we’re going to be aggressively pursuing that but as we improve our balance sheet and I haven’t seen ours discounted that much, our yield is still attractive but for us I’d rather keep the cash.
Joanne Solomon
Yeah, I mean from our perspective, I mean, clearly Jim and I debate heavily what’s the right level of net debt and he certainly sets my goals very high and we do our best to get those. Our goal is we’re hopeful that we drive the business into position where those converts convert and that’s not an easy task for the company.
If we get there then we can have more money to invest back into the business or further just the capital structure.
James Kim
Out of the $290 million convert $100 million, I’m taking responsibility. I know it’s going to be done.
The other $190 million, I think, as we continue to perform I think stock pricing will be there could be converted, I mean until 2013, isn’t it? Well, 11 or something.
So 2011, I’m sorry. So I think ample time for them to convert.
I really don’t look at that as a debt myself.
Operator
Patrick Wong, please state your company followed by your question.
Patrick Wong
The question has been answered, thank you.
Operator
Thank you and at this time we have no more questions.
James Kim
Thank you for participating in our conference call. We look forward to speaking with you again.
Operator
Thank you. Ladies and gentlemen, this concludes the Amkor Technology, Inc.
fourth quarter earnings conference call. To listen to a replay of today’s conference, please dial (303) 590-3000 or (800) 405-2236 with pass code 11105972.
ACT would like to thank you for your participation and you may now disconnect.