SemiLEDs went public in December 2010 in an offer led by Bank of America Merrill Lynch, Barclays Capital and Jefferies. The offer priced above expectations at $17 per share and was over-subscribed, but since its IPO the Taiwan-based company has now fallen short in all three of its quarterly reports by wide margins, making it difficult to imagine what the fuss was about.
Thursday's adjusted loss of 16 cents a share for the company's fiscal third quarter was 150% worse than the average analysts' estimate of 6 cents a share, and its loss of 3 cents a share in its fiscal second quarter disappointed Wall Street expectations for a profit of 8 cents a share.
"I don't know too many IPOs that miss right off the bat and for consecutive quarters, that's a negative accomplishment," says Avian Securities LED analyst Andrew Abrams. "I looked at the filing when the company was first going public and my thought was 'It's so insignificant, why is it going public?' I asked guys in the LED sector who said, 'We never come up against them. They don't exist.' You can't blow the first [few] quarters right out of the gate and expect investors to come back to you."Jefferies, one of the IPO's underwriters, had some trepidation ahead of Thursday's report, downgrading the stock to hold from buy and lowering its 12-month price target to $6 from $15. Of course, the firm did have that buy rating all the way through the stock's 80% year-to-date drop. The shares closed Thursday's regular session at $6.20, up 2%, but was last quoted at $5.42 in the extended session, down 78 cents, or 12.6%, on volume of almost 60,000. SemiLEDs said its revenue came in at $5.6 million for the May-ended quarter, below the $6.3 million consensus view. It also said it sees a fiscal fourth-quarter loss of between 23 and 25 cents a share, much wider than the current average analysts' view for a loss of 2 cents a share. "Our fiscal third quarter was challenging as pricing pressure and end demand weakness continued from the fiscal second quarter. However, we are seeing pricing stabilize," said Trung Doan, the company's chairman and CEO, in a press release.
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