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When I was at Financial World Magazine, we would do a list of the ten worst managed companies in America. The cycle was about once a year. To make the list, a company had to do a lot wrong compared to the rest of the stock market and its peer group. The financial results would have to be very poor, and companies in industries that were down across the board were usually not included. For this tech list, a number of financial sources were consulted along with research from Wall Street and sources like ValueLine, Morningstar, and Investor's Business Daily.

There is not enough lipstick for this pig. Pixelworks Inc. (NASD:PXLW) stock has cascaded from about $20 less than two years ago, and a 52-week high of $11.78 to $4.40. Company revenue was down slightly last year to $172 million from $176 million in 2004. However, operating income in 2004 was $28 million. In 2005, the loss was almost $22 million. The company managed to take its quarterly R&D costs from under $10 million in Q1 05 to over $15 million in Q3 and Q4, with nothing to show for it in revenue growth.

One might assume that all that R&D would pay off in 2006. Wrong. The company recently revised guidance down to between $35 and $36 million from a previous range of $39 to $43 million. In 2005's lowest quarter, the company did over $40 million.

In addition, there are some accounting issues. The company is "also performing an analysis on the recoverability of its intangible assets, long-lived assets and goodwill". Let's hope they don't find anything bad.

For obvious reasons, there are a lot of Neutral, Hold, and Sell ratings on the stock.

In the company's own words "advanced digital displays have exploded into the mainstream". It would be hard to argue with that. The Pixelworks system-on-chip integrated circuits would seem ideal for this market. The overall advanced display and streaming media device market is doing well. But, the Pixelworks investment in new technologies and R&D simply has not paid off.

PXLW 1-yr Chart

Douglas A. McIntyre is former Editor-in-Chief and Publisher of Financial World Magazine. He was also president of Switcboard.com when it was the 10th most visited website in the world, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc., and has served on the boards of TheStreet.com and Edgar Online. He does not hold securities in the companies he writes about. McIntyre can be reached at douglasamcintyre@gmail.com.

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Source: Ten Worst Managed Tech Companies: Pixelworks (PXLW)