Anaheim Circuit Board Designer DDi Plans IPO

DDi Corp., an industry leader in designing circuit board prototypes, plans to raise as much as $150 million selling stock to the public in an initial offering, the company said in a document filed with regulators.

Nearly all of the money would be used to pay off debt, the Anaheim company stated in its Securities and Exchange Commission filing.

The company’s highly leveraged state, coupled with accumulated losses of $82.9 million since 1997, made analysts wonder whether the offering would have much appeal.

“It looks like a high-risk investment without much upside potential,” said Rob Enderle, vice president of GIGA Information Group. “Hardware isn’t doing particularly well. It’s probably a case of they just need the money. If I had to pick a time to go public, this wouldn’t be it.”

Company executives were not available Monday for comment. They are in the so-called quiet period that precedes stock offerings.

The filing did not give a target date for the offering. It also did not state how many shares would be sold or the price range per share.

DDi specializes in quickly designing and making prototypes of circuit boards, which then are farmed out to other manufacturers to mass-produce, said Steve Gold, managing editor of CircuiTree magazine.

Speed is crucial: Half of the company’s sales in last year’s first nine months were generated by products and services delivered within 10 days, DDi’s filing says.

“Their services come at a premium [price],” Gold said. “There are a lot of shops that would love to have [DDi’s profit] margins.”

The company lists among its customers Nokia Corp. and Motorola Inc., the world’s No. 1 and No. 2 makers of cellular phones, and Cisco Systems Inc., the world’s No. 1 maker of computer networking equipment.

DDi expanded rapidly through two 1998 acquisitions, NTI in Colorado and Dynamic Circuits Inc. in Milpitas. Its sales swelled from $67.5 million in 1996 to $272.9 million for the 12-month period that ended Sept. 30, according to the filing.

But the company’s debt load has grown with each purchase. In the Dynamic Circuits deal, for example, DDi paid $96 million in cash and stock and assumed the Milpitas company’s outstanding loans.

Analysts and industry watchers differ on whether DDi is well-positioned to take advantage of strong overall growth in the circuit board industry.

Industrywide, sales grew more than 8% last year, reaching $9.2 billion in the U.S., said Anthony Hilvers, an executive at the trade group Institute for Interconnecting and Packaging Electronic Circuits.

But the hottest area is putting circuit boards into end products, rather than making the boards themselves, Gold said.

Another circuit board maker, Via Systems in St. Louis, has said it will go public and also will spend much of the money it raises to repay debt. But Via Systems has mapped out a strategy to manufacture the products that contain its boards, Gold said.

“That’s the sexy area to investors,” he said.

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DDi Corp. at a Glance:

Business: Designs, manufactures circuit boards

Headquarters: Anaheim

Employees: 1,800

Major customers: Nokia Corp., Cisco Systems, IBM, Intel

OC operations: Headquarters, manufacturing plant in Anaheim

Leadership: Charles Dimick, chairman.

Bruce McMaster, president, chief executive officer

SOURCE: DDi Corp.