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Trident Microsystems Still Holds Value

February 21, 2010 | About:

A year ago we wrote a post on Trident Microsystems, Inc. (TRID) and why we believed there was a lot of value in the company. If you are not familiar with the company, here is what you need to know:

  • Trident Microsystems, Inc. designs, develops, and markets integrated circuits (ICs) for digital media applications, such as digital television (DTV) and liquid crystal display television (LCD TV)
  • Company has been burning cash quickly, and there is no clear long-term strategy for profitability or market share gains.
  • TRID currently has huge cash reserves, and it is trading at a price that is close to the company’s net cash value (placing no value on other assets such as PPE, inventory, etc.)
  • Analysis indicates that company offers more value to shareholders by selling itself or by liquidating. However, no investors/hedge funds have taken an activist position. As a result, the company continues to destroy value and burn cash.
We still believe that shareholders could benefit from demanding the liquidation of the company, given that it has been trading below its net cahs value for some time now. More importantly, the company cotinues to burn cash without a clear strategic plan. FOr instance, the company recently completed the acquisition of the NXP set-top box and TV product lines. Although revenues are certain to increase in the future, I am still trying to understand how this acquisition will improve the competitive landscape for TRID.

The following is our updated analysis on what the liquidation of the company can yield given that it liquidates within 6 months from today:


Clearly, there is still some value to be unlocked by means of liquidation. We are still waiting for a brave activist investor to show up, but we are not holding our breath.

Rating: 2.8/5 (9 votes)


Jxl266 - 7 years ago    Report SPAM
Is there a math error somewhere? You want to liquidate a company curently trading at $1.56/share for $0.53-$0.90/share?
Mjhenry20 - 7 years ago    Report SPAM

I sure hope so because $.53 doesn't sound good to me at all.
Forexnutca - 7 years ago    Report SPAM
Value trap. I used to own this, until the merger got approved with NXP. NXP will own 60% of the shares of TRID (not very shareholder friendly). Also there is a share dilution from 95 million to 200million. Normally not a concern if the pro forma balance sheet has additional cash assets (tech assets suck, so I'm only looking for cash and receivables), but with the merger there is no longer a huge cash cushion that it's current Price to cash indicates with the dilution.

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