Buy or Be Bought, Jazz Technologies Needs to be Bigger

Specialty chip foundry Jazz Technologies (JAZZ) needs to double in size — either by buying another company or being bought, says the company’s chief financial officer, Paul A. Pittman. That’s why Newport Beach-based Jazz recently hired an investment banker to pursue strategic alternatives, Pittman told analysts Wednesday at the Roth Capital stock conference in Dana Point.

“The key to unlocking value is to double the size of the company,” he said. “It’s so important, whether we acquire someone, or we are acquired.”

“With our current stock price, it’s likely that we will be acquired,” he added.

Jazz shares closed Thursday at $1.02, down from $5.25 a year ago.

Former Apple Computer chief Gil Amelio, the Jazz chief executive who led the Acquicor investment company that acquired Jazz Semiconductor about a year ago, said a corporate goal is to acquire a low-cost foreign chip-fabricating plant.

The ideal situation for serving many types of customers, he said, would be to have “a high-performance fab in Newport Beach, a low-cost fab abroad.”

“The company was losing money when we took over last February,” Pittman said. “Since then, it has become profitable. We are a positive cash-flow company, though the stock market hasn’t rewarded us for that.”

Jazz, with about 725 employees, is a spin-off from chip maker Conexant Systems of Newport Beach

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