The Camarillo semiconductor company Semtech Corp. said it plans to restate financial results dating back five years to correct stock option grant date discrepancies and other accounting issues, moves that could result in fewer sales for the quarter. “The guidance reflects the general concerns our global customers are exhibiting related to macroeconomic issues that exist,” Semtech President and CEO Mohan Maheswaran told investors in a conference call. The chip maker has spent the past few months looking into its stock option practices, which have also been the subject of a Securities and Exchange Commission inquiry and federal grand jury subpoena. On July 20, the company concluded that accounting measurement dates from some stock option grants were different from the measurement dates used for earlier awards. As a result, the company added new accounting measurement dates, which could result in differing taxes, and opted to restate all of its statements dating to 2002. The restatement meant the company missed the deadline for its quarterly report for the period ended April 20, opening the possibility that it could be delisted from the Nasdaq Global Market. In an Aug. 29 ruling, however, the Nasdaq Listing Qualifications Panel extended the deadline to Nov. 10. Preliminary data submitted by the company shows sales of $64.9 million, up 12 percent from a year ago, but below the $66.69 million expected by analysts. The downturn may be a result of consumers being wary in how they spend, Maheswaran said. “Demand during the quarter reflected seasonal weakness in the computing and handheld end-markets, which is typical of the second quarter,” he said. “Customers appear to be cautious in their outlooks, reflecting concern over macro economic conditions and its impact on end-demand.” The company also expects third-quarter sales to drop 2 percent from the current quarter. Semtech also had $307.4 million in cash, cash equivalents and marketable securities for the quarter, up $23.3 million from the first quarter. Net sales for fiscal 2007 were $64.9 million, a 12 percent increase from $58 million of fiscal 2006. The returns along with changes in management and high legal costs in relation to the SEC investigation prompted Standard & Poor’s Equity Research to downgrade shares of the company from buy to sell. THQ Shareholder Sues In other SEC investigation news, a shareholder of the Agoura Hills-based videogame maker THQ Inc. is suing the company over its stock option grant practices. The lawsuit filed Aug. 25 in Los Angeles Superior Court lists THQ’s current and some former members of its board of directors as defendants. The suit alleges improprieties in the company’s issuance of stock options, among several other charges. The company is reviewing the allegations and “will respond appropriately,” according to THQ document filed with the Securities and Exchange Commission. In early August, the SEC launched an investigation into THQ’s stock options. The company handed over documents and is reviewing its practices with the help of an outside audit committee. It joined a growing list of Valley companies being investigated by the SEC for issuing stocks improperly; The Cheesecake Factory, Semtech Inc. and Vitesse Semiconductor Inc. are also part of inquires. THQ products are used on most videogame platforms including GameCube and PlayStation, as well as online, PCs and through wireless devices. It had sales of $757 million in 2005, the company reported. THQ also last month released the eagerly-anticipated game “Saints Row” for Xbox 360. Public Expands Portfolio The deal by Public Storage Inc. to acquire Seattle-based Shurgard Storage Centers Inc. closed late last month for an estimated $5.5 billion. Public Storage will receive $3.6 billion in stock and assume $1.9 billion in Shurgard’s debt. Additionally, $136 million of Shurgard preferred stock has been redeemed. The agreement brings to 2,100 the number of facilities under the Glendale-based Public Storage banner. It will have locations in 38 states and seven European countries. Ryland CEO Sells Shares R. Chad Dreier, CEO of the Calabasas homebuilder Ryland Group Inc., has sold 100,000 shares in his own company valued at $3.6 million, according to documents from the Securities and Exchange Commission. That came after he exercised an option for the same amount of shares. While that may seem Dreier, who has been CEO of the company since 1993, is worried about a slowing market, it doesn’t exactly mean he’s selling out. In fact, a company spokeswoman said it’s part of the routine. “Chad sells his stock on a routine, predetermined quarterly schedule and has for the past five years,” said Marya Jones. The dates and share amounts have been prearranged in accordance with the SEC, she said. “Under this written plan filed with the SEC, he will sell 100,000 per quarter at predetermined dates through the end of 2007,” Jones said. Ryland has grappled with less-than-stellar financials for 2006, with new orders down 39 percent from last year. Net income for the second quarter ended June 30 was also down 3.3 percent to $1.24 billion. Amgen Loses Suit Amgen’s allegation that a competitor’s anti-anemia drug violated patent rules was cut short late last month when an international commission voted against the Thousand Oaks biopharmaceutical company. The International Trade Commission affirmed an administrative ruling from July that found an anti-anemia medication developed by the Swiss pharmaceuticals and diagnostics company Roche Holding AG did not infringe on the U.S. patents of a similar drug developed by rival Amgen called epoetin. Amgen officials asked the international commission to investigate the similarities between the two products and bar Roche from importing the drug into the United States. Roche officials said the ruling clears the way for the company to win regulatory approval in the states and in Europe. The Commission ruling does not mean Amgen cannot file another patent suit, said Amgen spokesman Dan Whelan. The company is also suing Roche in U.S. District Court alleging patient violations on the drug, Whelan said. Amgen developed epoetin alfa in the late 1980s to correct anemia in patients with kidney disease and on dialysis. It sells under the product name Epogen. Staff Reporter Chris Coates can be reached at (818) 316-3124 or at [email protected].
