Sipex, once on the ropes, relisted on NASDAQ

SAN FRANCISCO — Sipex Corp. (Milpitas, Calif.), an analog company so staggered by a U.S. Securities and Exchange Commission (SEC) investigation and shifting market dynamics that it nearly went out of business, was relisted Wednesday (April 11) on the Nasdaq exchange after a two-year turnaround.

The maker of power and interface devices returned to the high-tech exchange, trading at $8.60, after being delisted nearly two years ago amid an investigation into financial irregularities. Last fall, former Sipex CEO Walid Maghribi agreed to pay a $45,000 fine to settle SEC charges. The SEC alleged that Maghribi allowed Sipex to report inflated financial information by recognizing revenue on two transactions in which the customers had no obligation to pay Sipex.

The SEC maintains that Maghribi was aware that Sipex had made side agreements with the two customers and would not be receiving payment.

Former Cypress Semiconductor sales vice president Ralph Schmitt took over as CEO in the summer of 2005, and began the task of settling shareholder lawsuits, bolstering investor and customer concern and overhauling the company's business.

"Emotionally, today was a really big day because we'd lived through hell," Schmitt said in an interview. "It wasn't clear that we were going to be able to keep the company together."

In the past two years, Schmitt has moved the company away from commodity businesses, shuttered its North American fab, cut staff almost in half and gone fabless through a partnership with Hangzhou Silan Microelectronics Co. Ltd. and Hangzhou Silan Integrated Circuit Co. Ltd.

When Schmitt joined just after the delisting, Sipex stock was trading in the so-called pink sheets at $1.10 per share. The company reported $80 million in revenue last year, and expects to grow 15 to 20 percent this year, leveraging its baseline interface products business and power devices such as DC/DC converters and LCD backlighting ICs, Schmitt said.

Gross margins, which were in the teens two years ago, have moved north of 30 percent and will pass 40 percent by next year, Schmitt added.

I work at Sipex, and it has been interesting to see how Sarbanes-Oxley has played out. Not many companies make it through the wringer after the kind of issues that Sipex has had. My understanding is that former Sipex CEO Walid Maghribi signed an agreement not to work as an officer in any publicly-owned technology company as part of his agreement with the SEC, but I have not seen any source material that proves or disproves it.

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