Chip maker’s CEO resigns
The chief executive of International Rectifier Corp. resigned Tuesday, becoming the third and highest-ranking executive to leave the El Segundo-based company amid an internal investigation of accounting irregularities.
The semiconductor company, whose energy-saving chips can be found in Sony’s PlayStation 3 video game console, had placed CEO Alex Lidow on leave Aug. 30.
Company spokesman Graham Robertson declined to state a reason for Lidow’s departure.
“As a result of our ongoing investigation, we cannot give further details,” Robertson said, adding that he could not say when the investigation was expected to conclude.
Lidow, the son of company founder and Chairman Eric Lidow, could not be reached for comment.
International Rectifier disclosed in regulatory filings in May that its financial statements dating back to September 2005 “should no longer be relied upon.”
Since launching its investigation, it has delayed reporting quarterly financial statements to the Securities and Exchange Commission.
In July, the company dismissed then-Chief Financial Officer Michael McGee without explanation. At the same time, Robert Grant, executive vice president for global sales, resigned.
“It sounds like they’re cleaning up house,” said Steve Park, a semiconductor industry analyst with Wedbush Morgan Securities. “This is a positive development from an investor standpoint. Some investors have not been happy with the management team. This is a chance for them to bring in new management.”
The company’s stock has fallen 14% this year, compared with a 9% gain for the Standard & Poor’s 500 index of blue-chip stocks.
International Rectifier shares gained 18 cents Tuesday to $33.10 but fell 10 cents to $33 in after-hours trading after the announcement of Lidow’s resignation.
Don Dancer will continue as the company’s acting chief executive, a position he has held since Lidow was placed on leave.
The company also announced steps to tighten its financial oversight.
The “audit committee and I are working diligently to bring the internal accounting investigation to a resolution,” Jack Vance, the company’s lead independent director, said in a statement. “We are also taking steps to implement meaningful changes to our internal controls and governance policies.”
Among the changes being made is closer control of the company’s Japanese subsidiary “to help assure adherence to proper revenue recognition,” according to the statement.
Park said investors would welcome the improvements, but the company must still provide a full accounting of its finances to remove the cloud of uncertainty that has been depressing its share price.
“They need to get this thing behind them and disclose everything in their quarterly financials,” said Park, who noted that the company’s products commanded a premium price because of their reputation for high performance.
Lidow had been with the company for 30 years, the last 12 as its chief executive. His father, Eric Lidow, founded the company in 1947.
International Rectifier makes chips and components for products such as refrigerators, game consoles, computers and satellite systems. It posted net income of $107.2 million on sales of $1.17 billion for its fiscal year that ended June 30, 2006.
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