Sunday, August 30, 2009

California Micro Devices (CMD)

CMD, a company headquartered in Milpitas, Calif., supplies semiconductors that are used in mobile handsets, LEDs, and personal comupters. Its manufacturing facilities are in China, Japan, and Korea.

It holds its annual meeting September 17, and the activist investment fund that threatens to play the role of skunk at that picnic has the oddly Hegelian name Dialectic Capital Management, which holds 8.8% of the company's stock.

The dispute concerns the Arques Technology deal. Back in April 2006, CMD acquired Arques, a move it proudly referred to at the time as "an important milestone in the evolution" of CMD. It thereby added DDR memory voltage regulators to its product portfolio. But by December 2008, management had become sufficiently disenchanted that it wrote off all the goodwill associated with that acquisition.

So ... what the heckis a DDR memory voltage regulator? As a techie doofus, I'll look it up. DDR stands for "Double data rate." It was a class of integrated circuit that began to be included in computers in the mid 1990s. Since then there has been DDR2 and DDR3. So it is possible that in buying Arques, CMD thought it was buying something more cutting-edge than was in fact the case, which would explain the disenchantment.

At any rate, the dissidents contend that such "debacles" are part of a recurring theme, "management has repeatedly embarked on risky projects in an indecisive manner, failing to deliver tangible results for stockholders. Meanwhile, the Board has clearly failed to hold management accountable."

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