Vitesse says it is limiting losses as probe continues

Struggling Vitesse Semiconductor Corp., which fired three executives last spring over alleged manipulation of stock options, told investors Monday that it had reined in its losses but wouldn’t have reliable financial statements until after a committee of directors finished investigating the scandal in December.

In a conference call with analysts and investors, executives with the Camarillo company said they still were unable to provide a normal quarterly financial report because of the investigation of improper dating of stock options, which will eventually require the company to restate its earnings reports for years back. The executives said they had $25.5 million in cash on hand at the end of September, down from $28.3 million at the end of June.

That “cash burn” of $2.8 million was “substantially better than some of the pundits” had predicted, Chief Executive Christopher Gardner said, despite the fact that the company spent $4.9 million on the options investigation.

Gardner said the company was reducing research and development costs to focus on areas of higher potential profitability. He said Vitesse’s networking chip division, which accounts for nearly half the company’s sales, had a weak quarter because of soft demand from Asia and from a big U.S. customer, an equipment manufacturer in the middle of a merger. But that slowdown should be temporary, and the storage and Ethernet divisions had strong quarters, he said.

Vitesse made the announcement after the close of regular trading, when its shares rose 2 cents to $1.26.