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Firm demands changes at troubled Alliance

Posted: 07 Jul 2005 ?? ?Print Version ?Bookmark and Share

Keywords:analog? mixed signal? memory? networking? communications?

An investment banking firm has demanded swift and dramatic changes at troubled Alliance Semiconductor Corp. after it quietly accumulated 6.8 percent of the chip maker's stock.

In a filing with the U.S. Securities and Exchange Commission (SEC) on June 27, Bryant Riley, founder and chairman of B. Riley and Co. Inc. (Los Angeles), demanded that Alliance should sell or close its traditional chip businesses and that its board must be removed. Riley and his affiliates claim to own a total of 2,418,821 shares of Alliance's common stock, representing a 6.8 percent stake.

"We believe that the selection of new directors who comprise a board majority will clearly signal to the market and to shareholders that [Alliance] is serious about evaluating and pursuing a new course of action," Riley said in a letter as part of the filing. The letter was addressed to N. Damodar Reddy, president and chief executive of Alliance.

"As we discussed, we strongly feel that [Alliance] should consider selling or closing its traditional business and sell its investment holdings, distributing the proceeds to shareholders," Riley said in the letter.

In response, Alliance, a provider of analog and mixed signal products, memory products, connectivity and networking solutions for the communications, computing, embedded, industrial and consumer markets, said that its board has formed a special committee of directors to evaluate and make decisions in response to the share accumulation and proposals recently disclosed in a Schedule 13D filing made by Riley and his affiliates.

The committee consists of Reddy, Sanford L. Kane, Juan A. Benitez and Gregory E. Barton. The committee has only just begun its work and has not yet established a timetable for completion of its review of the situation, according to Alliance.

"In the meantime, the company urges all stockholders not to take any action until the special committee has had an opportunity to evaluate and respond to the various proposals made by B. Riley," according to Alliance.

Over the years, Alliance has experienced its share of ups and downs. The company recently reported revenues of $5.6 million in its fourth fiscal quarter, as compared to $5.3 million in the previous quarter and $8.9 million in the fourth fiscal quarter of 2004.

Net loss for the fourth quarter was $23.2 million, or minus $0.65 per fully diluted share, compared to a net loss of $9.9 million, or minus $0.28 per share, for the previous quarter, and net income of $4.8 million, or $0.13 per fully diluted share, for the fourth fiscal quarter of 2004.

For fiscal year 2005, it reported revenues of $23.6 million as compared to $26.7 million reported in fiscal 2004. The net loss for fiscal year of 2005 was $49.8 million, compared to a net loss of $19.4 million, in 2004.

- Mark LaPedus

EE Times

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