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More delisting on NASDAQ looms

24 March 2009 | By Mark Osborne | Editor's Blog

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When the global stock markets started to dive from September last year, there were approximately eight semiconductor-related companies listed on NASDAQ that I had been tracking that were either just above or below the US$1.0 threshold for listing on the tech exchange. 

As the share sell-off continued, that number didn’t expand as rapidly as one might have thought. Those in the sub-US$1 catchment simply carried on falling, some to levels of only a few cents on extreme lows. With the massive sell-off, many companies saw their stock price battered to death, but not enough for an official health warning to be posted. The sub-US$1 price tag was still a few dollars away, but at least it was at year-end and into early January.

Regrettably, those that found themselves in breach of NASDAQ rules last year remain so today, but the list of companies in that league has now mushroomed, alarmingly.

By my calculations, the number of sub-US$1 semiconductor traded stocks on NASDAQ has doubled to 16.  Another nine are now close to the $1 level.

Yesterday, Electroglas was delisted from NASDAQ, one of the companies in the initial group I had started watching around August/September time. They have opted to spend obscurity on the Over-the-Counter Bulletin Board (OTCBB).

Spansion was also in that group and is now in Chapter 11, but don’t count them out just yet (a later blog on that point), as a potential delisting remains a concern. 

Aviza, Axcelis, FSI and Asyst still face possible delisting and none of these equipment companies have looked remotely like jumping back above the US$1 mark, especially in this industry/economic recession.

Newcomers to the list include Entegris and Mattson as well as perennial loss-maker EMCORE.

Worryingly, a host of other semiconductor firms are closing in on the US$1 mark. These include PDF Solutions, Aehr Test, UCT, Nova and Photronics. Tegal, which I mentioned before here in relation to Aviza, has also re-entered the watch list.

Most of these companies have been loss-making, not just in the short period of the current recession but for several years, and some have been in this situation for much longer than that.

Market research firm Gartner has banged on about industry consolidation for many years now, especially in the semiconductor equipment sector. This current recession is most definitely sorting the weak from the strong.  Interestingly, several of these companies have had hostile takeover bids in 2008 (Asyst and Axcelis), yet these acquisitions didn’t materialize. One reason was incumbent management believing the deals undervalued the companies and, as such, was not in the interest of shareholders.

My concern is that with the current lack of credit (nonexistent) in the financial markets and spreadsheet preservation strategies for those with something to preserve, consolidation will occur more through extinction than acquisition, and in whose interest is that?

Related articles

Aviza couldn‚??t do a Tegal but Tegal could be doing an Aviza? - 20 August 2009

Asyst defaults on US$76 million bank loan interest payments - 14 April 2009

Transmeta cuts jobs while Nasdaq posts a warning - 03 April 2007

Can Aviza do a Tegal? - 08 January 2009

Axcelis sells SEN share to Sumitomo Heavy Industries for US$132 million - 26 February 2009

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