Telemetrix Plc went to great lengths yesterday to distance its wholly-owned UK subsidiaries from the fate of troubled San Diego-based GTI Corp, in which the firm has a 57% stake. Chief executive Tim Curtis said the company had gone so far as to consult lawyers as to the liability of the UK operation if GTI was forced into Chapter 11 proceedings. He stressed it would be a long time before such drastic measures were required, but was keen to reassure investors that the UK operation was not exposed to its US fortunes. As a result of GTI’s continued poor performance over the half, Telemetrix turned in a disappointing set of results. At its annual general meeting the company cautioned shareholders that the group’s results would be poor (CI No 2,920), but even Curtis was surprised by just how bad the US situation had become. Pre-tax losses for the period after numerous charges were at 1.4m British pounds on revenue that slipped 11% to 97m pounds. Of this, GTI contributed an operating l oss of 3.3m pounds. Last year Telemetrix managed to evict the president and chief executive of GTI, along with other board members (CI No 2,873). His replacement, Albert Martinez, has a track record of turning companies such as Motorola Semiconductor and Applied Micro Circuits Corp around, and Curtis is confident he can perform similar miracles here. The division has suffered during the past few years, and poor quality of production has resulted in lost orders and market share. Instead of trying to make the best of inferior product, Martinez decided to start again, took a 900,000 pound hit and dumped the lot. As an added incentive, he has been given a 1% stake of GTI, which will be gradually increased. A complete reorganization of the business is under way. Staff have been cut back at Valor Electronics, resulting in a 403,000 pound lay-off charge, and the division incurred an additional $372,000 charge for the settlement of a class action lawsuit. Recent US acquisition Promptus Communications is almost at the end of its eveluation period, when Martinez must decide if the business is worth keeping. Its network bandwidth-sharing product has again failed to make it to market during the half, and Curtis voiced his fears that it m ay already have missed the boat. The division has substantially reduced its costs over the half, and Curtis warned there would be more to come. In the UK, the wholly-owned subsidiaries, Zetex and Trend have seen consistent sales growth. Analog semiconductor manufacturer Zetex increased revenue by 18% during the half and operating profits by 45%, and margins increased to about 20%. Telecommunications test equipment manufacturer Trend managed a 5% increase in revenue but the company said pro fits slipped due to an increase in research and development spend. Curtis said the future of the business is inextricably linked with that of the semiconductor industry as a whole. If things improve by October, he said, the full year results will be good. As for GTI, Curtis refused to be drawn into a debate about its future, but said all avenues had been explored. Telemetrix cannot sell, or even give away its 57% stake in GTI. According to Curtis, it has tried that one. Now it has done i ts best to help it on the long, hard road to recovery, there is hope, but it’s going to take a long time
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