By Jo McIntyre
Small Times Contributing Editor
Dec. 1, 2006 — Philips Business Electronics is selling off its remaining 8,406,007 shares of FEI Company. The shares are being offered by Philips Business Electronics International B.V., a wholly owned subsidiary of Koninklijke Philips Electronics N.V.
“What that will do for us is reduce the concentration of ownership,” said FEI’s CEO Don Kania. “People view that (concentration) as a problem, because it reduced the float. We think that in a quarter or two it will benefit the stock price significantly.”
Analyst Mark Miller, senior vice-president of equity research at Brean Murray, Carret & Co. of New York, said he’s optimistic about the proposed sale. However, he does see a downside: the loss of a formal relationship with a big European company that has a great heritage in the electron microscopy field. There is value in that relationship, he maintained, which FEI will have to forego.
At the same time, that relationship comes with a cost, said Miller. Any time a single company has that number of shares in another established company operating in the same geographical area, managers may feel somewhat constrained. “My feeling is that (the divestment) lets FEI manage operations in Europe with more freedom and flexibility to make strategic decisions,” Miller said.
Miller said he likes the managment changes he has seen at FEI during the five years he has covered the company. He said Kania brings a lot of unique attributes to the company.
“The company has been under pressure to improve their margins. Veeco, where Don came from, has been able to bring up its margins, while FEI has struggled to do that, I’m optimistic we’re going to see some progress there.”
Philips has viewed FEI as a purely financial investment, Kania said, and now that Philips is changing its business model to a healthcare and lifestyle company, the company is selling its non-related investments.
As a new CEO for FEI, Kania said he is quite satisfied about FEI’s own direction. The company has a strong technology, growing revenue, income and profitability.
Their own restructuring is behind them and they’ve sharpened their focus by selling Knight Technology, which operates in San Jose, Calif., and India. Knight provides yield management and failure analysis software to the semiconductor industry. FEI sold Knight to Santa Clara, Calif.-based Magma Design Automation Inc.
Going into 2007, the company will be introducing new products and tools, and just announced that it will expand its Helios NanoLab family of DualBeams, when it introduces the Helios NanoLab 400 and 400S systems next week at SEMICON Japan.
The tools combine advanced FIB and SEM technologies in an integrated, platform with a wide range of advanced high-resolution solutions for analytical labs of their semiconductor manufacturer customers.
The new products represent the next-generation of technology following FEI’s Strata 400 and 400 STEM in the semiconductor market, the company said.