SymmetriCom considers selling off its companies

Electronic News, August 18, 1997

San Jose, Calif.-SymmetriCom, the holding company that currently owns Linfinity Microelectronics and Telecom Solutions, is said to be considering selling one or both of those divisions in order to increase the value of its stock.

SymmetriCom, whose sole holdings are the two electronics firms, announced recently that it had retained investment bankers Alex. Brown & Sons to "evaluate strategic alternatives for maximizing shareholder value," according to a SymmetriCom spokesman.

The company declined to speculate on what those alternatives might include, or what has motivated the company's decision. However, a likely scenario might see the Linfinity division spun off into a separate company, followed quickly by its own stock offering, according to one analyst.

"SymmetriCom has two completely separate businesses, and the company has had difficulty unlocking the value from both these units," said John Stanley, senior VP and analyst at Newby and Co. He noted that the dissimilar natures of Telecom, a supplier of networking systems, and Linfinity, which manufactures mixed signal and power supply components, means no single stock analyst can cover both units. The result is that even though both units had record revenues in 1996, Wall Street has failed to respond with higher prices for SymmetriCom stock.

"I think if they separated the two companies it would help the stock prices," said Mr. Stanley. "In this case, the sum of the two parts would be greater than that of the whole."

Telecom had revenues of $90 million last year, and Linfinity generated $55 million in 1996, both of which were record postings, according to Mr. Lockwood. Both divisions have done well this year as well, with Telecom showing net sales of $23.5 million in the first quarter, up 64 percent from 1Q96, and Linfinity's net sales showing a 70 percent jump over the same period to reach $14.2 million in the first quarter. As of late last week, SymmetriCom stock was trading at $16.75, virtually unchanged from when the company announced two weeks ago that it had retained investment bankers to explore options, but down from its 52-week high of just over $21.50.

Mr. Stanley said SymmetriCom's long-term plan has always been to use Linfinity as a source of cash to grow its telecommunications division. Now that Telecom has come into its own, he said setting Linfinity loose would benefit both business units. He added that SymmetriCom might also spin off Telecom as well, which would mean the original holding company, left with no holdings, would effectively disappear.