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To say that wireless chipmaker Anadigics (NASDAQ:ANAD) has had a rough time would be an understatement. Marred by a series of bad decisions and bad luck Anadigics has never been able to fully capitalize on the wireless revolution. To understand why investors are taking Anadigics new turn-around story with caution one must first understand the history. In 2007 Anadigics future was looking bright. They had a best in class WCDMA HELP power amplifier (PA) line that was being utilized in a lot of the new high-end 3G smartphones, resulting in overwhelming demand and over $80 million in quarterly revenue by the middle of 2008. Unfortunately, Anadigics wasn't prepared for the surge in volume and began falling behind on customer orders due to capacity constraints and quality problems, forcing companies like Samsung and LG to take their business elsewhere. Anadigics tried to remedy the problem by building an additional wafer fabrication plant in Kunshan, China to increase capacity but couldn't complete it before the decline in business and therefore couldn't afford to finish the project. They ended up selling the plant for a mere fraction of the $50 million dollar investment. These blunders, exaggerated by the global economic recession, resulted in the resignation of the CEO Bami Bastani and the gradual decline of the stock price from $18 to below $2.

By 2009, Anadigics quarterly revenue had declined to $30 million and once loyal customers looked elsewhere for their wireless chips. CEO Mario Rivas used the time during the downturn to overhaul and modernize the fabrication plant to make sure quality and capacity wouldn't be a recurring problem going forward. Due to their innovative and efficient 3G and 4G PAs, customers began to once again incorporate their chips into the newest products. By the middle of 2010, revenues were starting to climb, topping $60 million a quarter, and it looked like Anadigics was once more on the road to recovery. However, again Anadigics failed to capitalize on the momentum. According to Rivas, Anadigics failed to meet the deadline on the new PA designs for their biggest customer Research in Motion (RIM) forcing the phone company to shift to a different vendor, wiping out almost a third of their revenue. As before, revenue dropped to $30 million a quarter and the CEO sent packing.

Is the third time the charm? For the last two years, current CEO, and long-time Anadigics employee, Ron Michaels has focused on repairing past customer relationships and designing and launching the most efficient, innovative products for wireless. To date, he has succeeded in both. Anadigics has recently released a broad range of products from their dual-band ProEficient-Plus PAs to their widely popular new WiFi FEICs. As expected, customers are once again lining up to incorporate these new chips into their smartphones and tablets. One customer that investors are certainly happy to see back is Samsung. After keeping its distance for some time it appears that Samsung is again beginning to trust Anadigics with high volume and providing a large chunk of revenue. Surpassing Apple as the biggest smartphone maker in the world, Samsung products are more popular than ever. This bodes well for Anadigics which is illustrated by their latest design wins in Samsung models including the Galaxy Mega, Galaxy S4, Galaxy S4 mini and almost all their tablet lines. Other familiar faces are also returning such as LG, where Anadigics recently announced their WiFi design win in the new G2 smartphone.

All these recent design wins are beginning to pay off. Revenue was up over 30% sequentially this quarter to $34.6 million with their new WiFi product accounting for almost 1/3. However, to me the most important part of the earnings call was not so much the increase in revenue, but the fact that Anadigics is becoming reliable to deliver large volumes of chips on short notice, which is needed in the fast moving semiconductor space. This was evident when it was mentioned that Samsung placed a large order before the end of the quarter for a legacy product that Anadigics was able to deliver on time. Further proof that the $80 million dollar Fab overhaul is paying off. In the past, this unexpected surge in orders would have been problematic resulting in loss of business. With another 4-8% revenue increase scheduled for Q3, Anadigics appears to be back on track. I fully expect Anadigics to comfortably surpass $40 million in Q4 due to their design win momentum, strengthening relationships, and the historical strength of Q4 earnings.

Despite the solid earnings and guidance, investors are still cautious on believing that Anagidics can finally turn it around sending the stock down almost 25% the last month. The main catalyst for the sell-off appears to be Anadigics management announcing they expect to be breakeven by Q1 or Q2 2014 with quarterly revenues of $45-50 million. Most stockholders wanted this to occur in Q4 2013. With over $40 million in the bank and the loss shrinking every quarter, Anadigics should have enough capital to reach this timeline without having to raise any more money. The recent article by Stephen Rosenman focused on Anadigics small size and the fact that they will have a hard time competing with the larger Skyworks, Triquint, and RF Micro due to their inability to compare in R&D spending. One thing is for sure, Anadigics has never had subpar products compared to the competition. In fact, Anadigics is thought of as being best in class on most of their products as evidenced by them being designed into the highest-end, power hungry smartphones and tablets available. Instead, Anadigics has lost market share because they have historically been unreliable in meeting demand when volume has spiked. The last two cycles of revenue upticks for Anadigics in 2007 and 2010 resulted in a share price of $18 and $8 respectively. At the current price of $1.77 and a market cap under $150 million, I believe there is considerable upside with very little risk. Patience will reward stockholders as we climb this latest cycle of revenue growth and I'd anticipate the stock doubling in the next 6 months.

Ultimately, the question remains if this time around Anadigics will be able to maintain growth as their products regain popularity and revenues begin to climb. One thing's for certain they'll at least get the chance.

Disclosure: I am long ANAD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.