ANADIGICS, Inc. (NASDAQ:ANAD)

CAPS Rating: 2 out of 5

The Company is a provider of semiconductor solutions in the growing broadband wireless and wireline communications markets.

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Member Avatar jed71 (58.76) Submitted: 9/8/2014 12:14:02 PM : Underperform Start Price: $0.81 ANAD Score: +4.34

My timing must seem very good here, but I assure you my timing around the selection was pure luck. A 3-star stock that I frankly cannot believe is 3-star – deserves 1 star, although that’s probably a bit generous. If there were a ½ star rating in Caps, I would suggest that’s a much better rating. I wish I had found this issue in 2013, but I guess $0.81 cents to $0.05 is good enough points-wise. So what don’t I like about this one? The thesis is really very simple. A small summary about the company:

“ANADIGICS, Inc. is a designer and manufacturer of radio frequency (RF) semiconductor solutions for cellular wireless, wireless fidelity (WiFi), and infrastructure applications. The Company's product portfolio includes power amplifiers, FEICs, front end modules (FEMs), and line amplifiers. Its cellular wireless power amplifiers and FEMs enable mobile handsets, smartphones, tablets, notebooks, datacards, automotive, machine to machine (M2M), and industrial devices to access third generation (3G) and fourth generation (4G) wireless networks utilizing international standards, such as long-term evolution (LTE), High Speed Packet Access (HSPA), Code Division Multiple Access (WCDMA), Evolution Data Optimized (EVDO), Code Division Multiple Access (CDMA), and Worldwide Interoperability for Microwave Access (WiMAX).”

The technology seems pretty cool – lots of pretty verbiage and catchy acronyms. What’s not cool is the rate at which they are burning cash and their general financial performance. This caught my eye in the recent 10-Q:

Gross Margins (6 months ended June 2013): ($0.4MM) about -1%
Gross Margins (6 month ended June 2014): $2.9MM about 6%

If their gross margins are this tight, how bad are the operating margins and net income? Frankly, they’re both really bad. I went back five years and checked the gross margins, and they are extremely tight for almost all years. In addition, they are blasting through a bunch of cash on both R&D and SG&A expenses. To date in 2014, they have spent $25MM on both leading to horrible negative net income. Hence the stock price has not fared well recently. This has all lead to a loss of ($27MM) thus far in 2014. The situation certainly does not look good for this firm. Here’s another news release I found:

“In connection with this restructuring plan, a workforce reduction will eliminate approximately 140 positions throughout the Company, or approximately 35% of our workforce, during the second and third quarters of 2014. Approximately 40% of the affected employees were notified in June 2014, resulting in the Company recording a restructuring charge of $0.7 million during the second quarter of 2014, covering severance, related benefits and other costs. An approximate $1.8 million workforce reduction charge is expected to be recorded in the third quarter of 2014. The workforce reduction, along with other cost reduction actions, were undertaken with a view to achieving annualized savings of approximately $15 million.”

While this by itself does not spell doom for this company, it certainly is not a good sign. If you’re cutting R&D to this extent, what’s left for the shareholders to hang their hat on? I applaud the company for taking these steps but I cannot help thinking they are too little too late. Go look at the financials, and you’ll understand why I feel that way. 35% staffing reduction is huge and very demoralizing for remaining employees. I cannot imagine that anyone remaining at the firm that has a shred of talent isn’t considering leaving the firm for greener pastures. The ripples effects of this sort of action are far reaching into a firm’s culture and psyche.

“On August 11, 2014, ANADIGICS, Inc. (the "Company") received a letter from the staff (the "Staff") of The NASDAQ Stock Market LLC ("Nasdaq") providing notification that, for the previous 30 consecutive business days, the bid price for the Company's common stock had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until February 9, 2015, to regain compliance. If at any time before February 9, 2015, the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide the Company with written confirmation of compliance.”

My wild guess is that the company eventually does a big reverse split and then tanks again after it has occurred. There were a couple of other items I found that contributed to this company’s dire situation, but this seems like enough to share to give folks an idea of why I have red-thumbed this. I am holding this to $0.05 or lower. Too bad I cannot find some shares to short.

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Member Avatar SqwiiTrader (< 20) Submitted: 11/9/2013 5:32:37 PM : Outperform Start Price: $1.82 ANAD Score: -73.03

monthly IHS

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Member Avatar FairOakInvest (20.35) Submitted: 1/19/2012 9:44:20 PM : Outperform Start Price: $2.61 ANAD Score: -127.23

winning at samsung

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Member Avatar harv1r (23.06) Submitted: 9/8/2011 6:19:45 PM : Underperform Start Price: $2.51 ANAD Score: +144.20

Based on current financial performance I see no near term beating the S&P. Even if things will be OK in a longer term I see no reason to buy now.

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Member Avatar lomunchi (< 20) Submitted: 6/1/2011 1:12:07 PM : Outperform Start Price: $3.33 ANAD Score: -131.91

room to grow.

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Member Avatar KimLanners (< 20) Submitted: 3/29/2011 12:31:59 PM : Outperform Start Price: $4.27 ANAD Score: -138.89

semi2011

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Member Avatar Stadthund (70.99) Submitted: 2/17/2011 1:49:14 PM : Outperform Start Price: $6.19 ANAD Score: -141.44

LTE and other wireless broadband trends.

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Member Avatar sanminasandy (< 20) Submitted: 9/14/2010 4:57:59 PM : Underperform Start Price: $4.76 ANAD Score: +167.57

irrational exuberance on display here. This is a tiny fish in a large body of water and they are not a significant player. they are enjoying a sector rally but will be among the first to reverse and fall precipitously.

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Member Avatar timmow (< 20) Submitted: 7/30/2010 7:20:16 PM : Outperform Start Price: $4.48 ANAD Score: -167.16

Lets see what they can do.

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Member Avatar RobertJBanach (< 20) Submitted: 7/4/2010 5:17:18 PM : Outperform Start Price: $4.22 ANAD Score: -180.97

Short term volatility, long term potential.

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Member Avatar elica (< 20) Submitted: 2/18/2010 10:58:45 AM : Outperform Start Price: $4.39 ANAD Score: -169.36

great tech sign

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Member Avatar plvo38 (< 20) Submitted: 11/2/2009 12:54:07 PM : Outperform Start Price: $3.16 ANAD Score: -175.44

buy

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Member Avatar risingaro (80.37) Submitted: 10/22/2009 5:07:22 PM : Outperform Start Price: $3.88 ANAD Score: -168.28

Riding on the Mobile Internet Tsunami.

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Member Avatar PizzeriaMan (24.59) Submitted: 9/16/2009 8:46:23 PM : Outperform Start Price: $4.39 ANAD Score: -176.27

Double digit compounded growth rate for last 5 years, good debt/equity ratio, has been beaten dow, is in a good niche market + agree with tulipomania

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Member Avatar GCshipbuilder (< 20) Submitted: 7/1/2009 1:29:39 PM : Outperform Start Price: $4.02 ANAD Score: -209.95

Cell phone technology is not slowing down nor is it expected to. These idiots can't pay their mortgage and complain about unemployment, but they have got to have the new iPhone.

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Member Avatar OTMoptionsfool (31.43) Submitted: 2/15/2009 8:46:00 PM : Outperform Start Price: $2.29 ANAD Score: -228.13

ANADIGICS, Inc. provides semiconductor solutions to the broadband wireless and wireline communications markets. The company designs, develops, and manufactures radio frequency integrated circuits. It offers cable television (CATV) cable modem and set-top box products, CATV infrastructure products, and fiber-to-the-premises products. They have been in business for 25 years making them a stable pick in these uncertain times, and certain portions of the semiconductor market are doing very well right now. They do tend to have LARGE volume sell-offs so if you can't keep an eye on the stock price or news every day, stay away! I am treating this one as a short term play and will not hesitate to pull the trigger on bad news. It is setting up for a 50/100 moving average cross but it is a bit extended so I would look to buy on a pull back to somewhere near $2.25. Major funds adding ANAD shares and those with new holdings include: Goldman, Schroder, Credit Suisse, Academy, Summit, Pioneer, Schwaub, Profund, Proshare and Streettracks. Oh ya. Almost forgot this. On Friday 13, 2009, it traded up 0.16 cents per share (7.21%) on 3 times average volume while the Nasdaq was down .48%.

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Member Avatar ryanman000 (44.23) Submitted: 10/5/2008 8:12:23 AM : Outperform Start Price: $2.59 ANAD Score: -167.51

That was easy

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Member Avatar freefly007 (35.16) Submitted: 9/10/2008 10:36:09 PM : Outperform Start Price: $3.28 ANAD Score: -150.69

Great technology, big demand, alleviated supply issues. Customers will return.

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Member Avatar Dodobrains (49.52) Submitted: 9/7/2008 3:04:18 AM : Underperform Start Price: $3.33 ANAD Score: +142.90

Wireless may be growing, but investors are scared away from the small fishes.

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Member Avatar ckaminsky1971 (36.28) Submitted: 8/31/2008 5:08:49 PM : Outperform Start Price: $3.46 ANAD Score: -141.19

consumers will always demand faster stable wireless data

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