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.” Read the rest of this entry »

Things are not shaping up for a Happy New Year at California Micro Devices, the Milipitas chip maker whose second largest shareholder sent it a letter New Years Eve calling for the company to pay out more than half the cash in its coffers to its shareholders in a special dividend and to “immediately engage an investment bank and begin a sale process” of itself.

In his letter to Cal Micro’s board Wednesday, Dialectic Capital Management’s John Fichthorn wrote of how the investor’s “frustration with management’s inability to perform culminated” on Dec. 10 when Cal Micro announced Read the rest of this entry »

California Micro Devices whittled away at shareholder democracy last week when its board approved an amendment to its bylaws that changed the way a special meeting of its shareholders can be called, according to a filing Wednesday. Such meetings now may only be called by the Milpitas chip makers board of directors. Previously, special meetings could also be called by shareholders owning at least 10 percent of the company’s stock.

In early September Dialectic Capital Management, a New York hedge fund, reported owning 1.27 million Cal Micro shares, giving it a 5.5 percent ownership stake. Four other investors hold more shares with the largest stake, 8.2 percent, held by another New York firm, Royce & Associates.

Cal Micro, which said at the end of October that a power outage at one of its foundry partners in Shanghai would cost it an estimated $1 million in sales for its December quarter and about half a million dollars in net profit, has seen its stock price struggle ever since.

It’s share price may be under increasing pressure. A backward looking price-to-earnings ratio can’t be figured right now because the company has a trailing-twelve-month net loss. But looking forward, the current $4 stock price looks pretty expensive, trading at about 65 times projected earnings.

A recent power outage at one of its foundry partners in Shanghai will cost California Micro Devices an estimated $1 million in sales for its December quarter, the Milpitas chip company said in a press release Monday. The company’s previous guidance called for sales of between $15 million and $17.5 million, but that was changed to sales as low as $14 million and as high as $17 million.

Net profit would likely be reduced by as much as half-a-million dollars. That would reduce the company’s estimated profit per-share range from a previously estimated 3-cent loss to as high as a 1-cent gain to a range from a loss of as much as 5 cents to break-even results.

Cal Micro — which makes chips used in protection devices for mobile handsets, digital consumer electronics products such as digital TVs, and personal computers as well as devices used for mobile handset displays –reported having “completed the transition to a fully fabless business model” in its 10-K report covering fiscal 2007.

The company’s gross margin for the quarter ended June 30 dropped to 31 percent from 38 percent in the comparable quarter the year before, according to its most recent quarterly filing. The drop was blamed primarily on lower prices and volume, which were partially offset by cost reductions that came mostly from manufacturing outsourcing.

What do California Micro Devices and Ikanos Communications have in common? Both are semiconductor firms located in Silicon Valley, both have stock prices that hit 52-week lows in the last month and both have a new major shareholder called Dialectic Capital Management, a New York hedge fund.

In a form filed Wednesday, Dialectic reported for the first time owning 1.27 million shares of California Micro Devices (ticker CAMD), or 5.5 percent of shares outstanding. No word at this time on what it paid for the shares, but California Micro hit a 52-week low of $3.56 on Aug 22. Its shares climbed 22 cents Wednesday, or 5.7 percent, to $4.10 Wednesday.

It filed another form reporting it had acquired 1.66 million shares of Ikanos Communications (ticker:IKAN), or 5.8 percent of the company. Shares of Ikanos climbed 11 cents, or two percent Wednesday, bouncing back after hitting a 52-week low of $5.55 early in the trading day.

The hedge fund is managed by John and Luke Fichthorn, who also run Dialectic Antithesis Partners.