Shares of analog and mixed-signal semiconductor developer Leadis Technology (OTCPK:LDIS) are currently trading hands around $3.50 per share -- only 40 cents higher than the company's current cash balance and well below its IPO price of three years ago in the low teens. The company has no debt on the balance sheet, and it designs color display drivers, LED drivers, and audio integrated controllers [IC] for mobile consumer electronics devices. The company recently embarked on a "Sight, Sound, and Touch" strategy that seeks to move away from higher volume, low margin products as Leadis transitions itself into higher margin product lines.
New areas of focus for Leadis are in the areas of LED backlight drivers, touch screen sensors, and audio products. While the company's core display driver IC business continues to face challenges and new products are not expected to contribute meaningfully to results for several quarters; Leadis is expected to continue reporting small quarterly operating losses and declining revenues. As part of its new strategy to expand into the analog audio business, Leadis acquired a privately held company called Mondowave that specializes in low-power consumer audio applications. Leadis paid $8 million in cash to Mondowave's stockholders during the first quarter of this year, with the potential for additional performance and retention bonuses.
With no debt on its balance sheet and over $3 per share in cash, Leadis is well positioned to weather its current transition into higher margin semiconductor products for the rapidly growing consumer market for products such as cell phone handsets, PDA's, navigation devices, and digital music players. However, while there do not appear to be any imminent catalysts on the horizon to move this stock upward, the company has sufficient cash to continue plodding along until it can return to profitability and top line growth.
LDIS 1-yr chart