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Vitesse – Options Backdating Saga Continues

Tomorrow’s Saturday edition of the WSJ has a short article on Vitesse Semiconductor (VTSS) and the cancellation of Monday’s earnings call.

According to a release made today by Vitesse, the suspension of three executives was related to the “integrity of documents” involving its stock-option program. They also cancelled the earnings release and call scheduled for Monday.

The announcement, made Thursday night, came two days after Vitesse placed CEO Louis R. Tomasetta, its chief financial officer and an executive vice president on administrative leave and said it established a special committee of directors to probe option-grant timing.

It isn’t clear exactly what the company meant when it referred to the documents’ integrity, and the company didn’t respond to requests for elaboration.

I spent a large part of my life and a tremendous amount of sweat equity working at Vitesse and it rips my guts out to see what the company is currently going through. What is most frustrating is I am certain that the imminent threat of shareholder-class lawsuits from nice folks like Lerach are making public information scarce and rapid resolution of the issue impossible. I’d like to know what the hell happened, just like everyone else.

PMC-Sierra (PMCS) paid $400M cash for the Avago (Agilent) storage semiconductor business that was generating $110M a year in revenue. Storage makes up roughly 1/2 of Vitesse revenues ($200M a year) and their prospects in the SATA market look solid – a transitive valuation of the Vitesse storage business is roughly $500M. The Telecom and Ethernet divisions generate another 100M a year.

Best of luck to everyone at Vitesse.

Original article from the WSJ that started it all can be found here.

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