Microsemi Buys 7% Stake in Struggling Semicon

Microsemi in Santa Ana has purchased a 7% stake in Semicon, a financially struggling semiconductor maker in Burlington, Mass., and Semicon President Hal Mahar is delighted.

“It makes me feel quite good when someone like (Microsemi Chairman) Phil Frey takes an interest in my company,” Mahar said Thursday.

Microsemi, a semiconductor maker that has acquired seven smaller companies in the past 18 months, notified the Securities and Exchange Commission last week that it has recently purchased 200,000 shares of Semicon stock for $261,000, an average of $1.31 per share.

Microsemi has no immediate plans to significantly increase its stake in the company, said David Sonksen, Microsemi’s vice president of finance. And, when Frey announced his company’s acquisition of a North Carolina firm last month, he said Microsemi probably would slow down its acquisition pace.

Sonksen said Microsemi purchased Semicon stock because it is undervalued. Since the SEC filing, Microsemi has purchased a few more Semicon shares.

Semicon’s fiscal 1987 revenues of $13.3 million are about one-quarter the size of Microsemi’s revenues, which topped $46.8 million in its fiscal 1987. But Semicon stock is worth a fraction of Microsemi’s.

All of Semicon’s 2.8 million shares outstanding could be had for $3.2 million at its recent price of $1.125 per share. In comparison, Microsemi’s 9.1 million shares outstanding are worth $48.8 million at Thursday’s closing price of $5.375 per share.

Semicon is a closely held company. Mary Jean Robison, widow of the company’s founder, Rolland Robison, is the largest shareholder, with 28.3% of Semicon’s stock. Others with longtime connections to the company hold about 50% of the shares.

Semicon is a company in transformation, according to Mahar. The company posted a $4.3-million loss on $3.2 million in revenues in its fiscal 1987 second quarter, which ended in January, 1987. But losses were trimmed to $605,000, on $3.6 million in sales, in the second quarter of fiscal 1988.

Semicon, which once operated four subsidiaries, sold one of the subsidiaries, shut down another, filed for Chapter 7 federal bankruptcy protection for a third, and has retained its semiconductor parts business to make that profitable. Before its troubles, Semicon traded as high as $8 a share in 1986.

“But our stock is still way down,” Mahar said. “That’s why Microsemi’s investment gives me a feeling of confidence for what’s been done.”