Zoran Corp. (Nasdaq: ZRAN) president and CEO Dr. Levy Gerzberg is fighting back for the semiconductor company he founded.
Hedge fund Ramius owns 8% of Zoran. It apparently wants to replace the board of directors on the grounds that it is not carrying out its duties and is allowing management from "spending good money after bad in pursuit of elusive revenue growth that may never result in improved profitability" in unprofitable sectors, especially digital television.
In response, Gerzberg says that Zoran has a strong and experienced board that is focused on creating value for all shareholders. He wrote to shareholders, "The Ramius Group is opportunistically seeking to remove, without cause, all independent members of your duly-elected board of directors, and replace them with the Ramius Group’s own nominees."
Zoran admits that the digital TV market is declining, but says that Ramius is ignoring Zoran's plans to meet the challenges in the segment. Gerzberg says that the company has invested heavy in developing new products, and that by the end of 2011, it expects design wins from Tier-1 TV makers, and that digital television will become an important source of profits beginning in 2012. "We believe that abandoning our DTV investments at this time, immediately prior to realizing returns, is not in the best interests of the company and its stockholders."
Ramius estimates revenue from the digital TV segment at $30-50 million in 2011, but Zoran more optimistically estimates $75 million.
The dispute may end in some sort of compromise which gives Ramius representation on the board.
Published by Globes [online], Israel business news - www.globes-online.com - on December 16, 2010
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