WJ Communications CEO and CFO Buying Stock (WJCI)

From Insider Score: The top-two executives at WJ Communications (WJCI) have purchased stock, picking up shares just three days after the company reported first-quarter results.
On May 12th, CEO Bruce Diamond bought 10K shares at an average price of $2.32, and CFO Gregory Miller purchased 10K shares at $2.25. As a result of the buys, Diamond now controls approximately 993.2K shares, though he's only purchased a total of 30K shares on the open market (the remaining 963.2K shares are restricted stock awards), while Miller owns 20K shares, including 10K shares of restricted stock that vest next April.

The former COO of ZiLOG, a provider of integrated 8-bit microcontrollers (MCU) and universal remote control solutions, Diamond joined WJCI in June 2005. He has a long history in the semiconductor sector, and he previously bought 20K shares of WJCI at $1.14 to $1.28 in November 2005. Miller, meanwhile, joined the company last month after serving as CFO of California Micro Devices Corporation, a supplier of application-specific analog semiconductor products. He was formerly in senior financial positions at LSI Logic (LSI), National Semiconductor Corp. (NSM), and Texas Instruments (TXN).

San Jose-based WJCI designs and supplies radio frequency solutions to multiple markets, targeting wireless communications, radio frequency identification ("RFID"), broadband cable, and defense and homeland security. The company makes RFID readers, amplifiers (for the telecom and cable sectors), converters, and mixers. For Q1, WJCI reported a net loss of -$2.4M, or -4 cents per share, down from -$7.7M, or -12 cents per share, a year earlier. Revenue, meanwhile, grew 59% to $12.3M, topping the company's own estimates. WJCI ended the quarter with cash, cash equivalents, and short-term investments of $28.3M and no debt. "We were pleased with our first-quarter revenue, which was significantly above our guidance given in early March," said Diamond. "Our strong performance was driven by continued growth in our wireless infrastructure business from our large telecom equipment OEM customers, in support of 3G network build outs. We also saw broad based strength in Asia with solid demand in Korea driven by the repeater market."

Despite the solid quarter, WJCI is facing a couple of issues.

First, the company is not in compliance with NASDAQ listing requirements because of a deficiency related to its board of directors. The company has until the end of the year to fix the issue, which simply involves naming a new independent director to the audit board. Second, a group of shareholders known as the Fox Paine Entities owns 25.5M shares of WJCI, or a 39.2% stake (WJCI underwent a recapitalization merger with Fox Paine in 2000). WJCI was recently forced to register all of the shares of sale, though it's unclear if the registration was merely a formality. Lastly, WJCI derived 58% of its revenue in 2005 from just two customers, Richardson Electronics (RELL) and Celestica (CLS).

Worth Noting: Diamond had a bit of a problem pulling the trigger on his stock buy last week.

"On May 12th, 2006 [Diamond] purchased 10K shares of [WJCI's] stock through an online brokerage account. An initial purchase of 5K shares was made and when attempting to purchase the next block of 5K shares, the shares initially purchased were inadvertently sold. The 5K shares that were inadvertently sold were immediately re-purchased by [Diamond]," a footnote attached to Diamond's Form 4 filing disclosed.

Excluding commission fees, Diamond's mistake cost him $128.60, or enough money to buy about 58 shares of WJCI.