Digital TV Chips: Top Execs Leave Trident Microsystems, Genesis

Includes: GNSS, TRIDQ
by: Eric Savitz

It was a wild day Thursday in the niche of the semiconductor market for digital television chips. Trident Microsystems (TRID) late Wednesday announced the resignation of two long-standing directors, Yasushi Chikagami and John Luke.

Chikagami, a director since April 1994, spent two decades as chairman of a private Asian electronic components and peripherals company called EI-EN Group. Luke, a director since January 1999, is a long time electronics industry exec, who was president of TSMC USA, an arm of Taiwan Semiconductor, from 1989 to 1997.

The resignations are related to the company’s stock-options backdating probe. Trident said the committee looking into the issue “recently became aware of information that…led the board to believe that a conflict of interest may have arisen” between the two men individually and in their capacity as directors. The company did not detail the nature of the conflict.

Meanwhile, Trident rival Genesis (GNSS) Wednesday night reported fiscal fourth quarter results and first quarter guidance that were above Street expectations. Some analysts still have severe doubts: Daniel Gelbtuch, of CIBC World Markets, Thursday morning wrote that “profitability seems a long way off and dependent on a slate of unproven products.” He also contends that reversing the company’s recent market share losses will be tough “given relentless competition from the likes of TRID.” He advises investors “to resist the dangerous lure of what we see as a value trap.”

Similarly, Roth Capital’s Jay Srivatsa Thursday morning advised that “given its low gross margins and lack of material revenue growth over the near term…it is unlikely that the company can achieve breakeven operating profit” until the middle of fiscal 2009. He notes that the company’s breakeven run rate is $50 million to $65 million; the company is forecasting $39 million to $44 million for the June quarter. His view: “Until we witness positive developments, we would advise investors to take their money elsewhere.”

Finally, lest Genesis fans be tempted to gloat about Thursday’s events, note that it was just a few days ago that the CFO at Genesis left the company to "pursue another opportunity."

Trident shares Thursday fell 61 cents to $20.58; Genesis jumped 81 cents to $9.49.

TRID vs. GNSS 1-yr chart:
trid gnss chart