SiliconBeat

California Micro Devices, the recipient of a New Years Eve letter from a Dialectic Capital that urged the chip maker to pay a large chunk of its cash out to shareholders in a special dividend, sent the New York investor a reply Monday that nixed that idea, along with the notion that the company should put itself up for sale.

In his letter to Dialectic’s manager, John Fichthorn, Cal Micro Chairman Wade Meyercord said on behalf of his board that “(w)e appreciate” Dialectic’s “interest and support” as a stockholder, noting that the private equity firm had been a 5 percent owner since September 2007 (i.e, not that long a time).

“The strategic issues we have been considering include those raised in your letter,” wrote Meyercord, “but we have come to different conclusions.”

“In general, we do not favor returning cash to stockholders as a dividend or via large share repurchases. Instead, we favor retaining CMD’s cash for operations, to show financial strength to our customers,” wrote Meyercord, noting that the board did approve a small “one-time” buyback of $1 million shares in August.

He also rejected Dialectic’s notion that Cal Micro should try to peddle itself, “when the stock market and our stock price is at close to its low point over the past several years.”

Meyercord concluded his letter with, “It should be noted that we are not addressing in this letter various other matters raised in your letter and that our not addressing them in this context should not be deemed in any manner to indicate our concurrence with the positions you took or the statements you made in your letter.”

And what points were those? Mostly related to executive compensation, of course. Just how many of us would cop to charges we’re overpaid?