(Adds analyst comments, updates share movement)
By Sruthi Ramakrishnan
Oct 29 Activist investor Starboard Value LP
asked TriQuint Semiconductor Inc to consider selling or
restructuring its mobile power amplifier business, which it said
was a drag on the radio frequency chipmaker's share price.
TriQuint shares, which have halved in value since touching a
10-year high of $14.88 in 2011, rose as much as 7 percent on
Tuesday after the investor's comments.
Starboard, which owns an 8 percent stake in TriQuint, said
the company should focus on its networks and defense businesses
and become a fabless chipmaker like rival Skyworks Solutions Inc
Fabless chipmakers, such as Skyworks and Avago Technologies
Ltd, outsource most their manufacturing to foundries
around the world.
The mobile power amplifier business is the biggest part of
TriQuint's mobile devices unit, which accounts for about 65
percent of the company's revenue.
"We have communicated our desire to immediately begin
conversations with TriQuint's board regarding both strategy and
board composition," Starboard Managing Member Jeffrey Smith
wrote in a letter to TriQuint Chief Executive Ralph Quinsey. (link.reuters.com/veh34v)
Charter Equity Research analyst Edward Snyder said he was
doubtful if the company's mobile division could operate on its
own if TriQuint sold off the power amplifiers business.
"It's a double-edged sword. On the one hand, you can break
up the company and get more value in the short term but you may
also end up killing it off," Snyder said.
TriQuint forecast current-quarter results well below Wall
Street expectations last week, partly due to lower revenue from
embattled smartphone maker BlackBerry Ltd .
Starboard said TriQuint should exit its Oregon wafer
fabrication facility, moving part of its power amplifier
production to its other plant in Texas and outsourcing the rest
to a foundry.
"It's clear that of the two competing schools of thought on
how to do this, the winner is definitely the Skyworks-Avago-RF
Micro model," Snyder said.
Ending its fabrication business could, however, stop the
flow of funds that the company receives from the government to
develop technologies for defense products, he said.
TriQuint was not immediately available for comment.
TriQuint's stock, which has risen 39 percent since Starboard
announced a 7.8 percent stake in the company, were up 5 percent
at $7.73 in afternoon trading.
"They (shareholders) think there's going to be a proxy fight
or takeover battle for TriQuint so they are bidding it up on
that," Snyder said.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by
Kirti Pandey and Don Sebastian)