GCT Semiconductor Braves The IPO Market

Sep.20.11 | About: GCT Semiconductor (GCTS)

By Tejas Venkatesh

While the IPO pipeline is getting drier, GCT Semiconductor (GCTS) has taken the contrarian route, filing paperwork for its proposed $100 million offering. The company, a fabless designer and supplier of 4G mobile system-on-a-chip semiconductor solutions, has seen revenue triple from 2009 to $68.64 million. With the mobile industry transitioning to 4G to handle the increase in rich media content, GCT thinks it could be on the verge of seeing sustained growth.

Clearly, that growth is what GCT will be selling on Wall Street. The planned offering resembles the Sequans Communications (NYSE:SQNS) IPO, with the business profiles and financials of the two companies lining up similarly. For instance, both firms had nearly identical revenue at the time of filing, and neither had an operating profit. Sequans came to market in April at 5 times trailing sales, a valuation we suspect GCT would be delighted with, since Sequans is currently trading at 2 to 3 times trailing sales.

Across the tech sector, vendors planning to go public have instead ended up inside companies that are already public. In June, ANSYS (NASDAQ:ANSS) pulled Apache Design Solutions from its IPO track and acquired it for $335 million. Similarly, SiGe Semiconductor accepted a bid from Skyworks Solutions (NASDAQ:SWKS) in May. With Qualcomm (NASDAQ:QCOM), Intel (NASDAQ:INTC) and Broadcom (BRCM) investing heavily in 4G solutions, we wouldn’t be surprised if one of these well-funded players snared GCT.