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Delisting Threat to TranSwitch

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Semiconductor solutions provider TranSwitch Corp. recently announced that it has received a delisting notice from ‘The Nasdaq Stock Market LLC’ that threaten to suspend its shares from trading from Jun 17, 2013. Following the announcement, the company’s share plunged 6.55% to close at $0.4335.

Earlier, in Dec 2012, the company had received a letter from Nasdaq for failing to comply with the ‘Nasdaq Listing Rule 5550(a)(2)’, which requires stocks to maintain a minimum bid price of $1.00 per share on closing basis for 30 consecutive trading days.

Also, in Feb 2013, the company had received a follow-up letter from Nasdaq stating that it has failed to comply with the listing norms which requires listed companies to maintain a minimum of $2.5 million of stockholders’ equity. For full year 2012, TranSwitch had a stockholders’ equity of $1.23 million.

Thereafter, even during the 180-day notice period following the first letter, the company’s closing bid price failed to close at or above $1.00 for a minimum of 10 consecutive trading days. It was also unable to comply with the minimum requirement for stockholder’s equity.

In response to the delisting notice, TranSwitch has decided to file an appeal of determination with a Hearing Panel, and intends to submit its plan to regain compliance along with a request for some additional time.
However, it remains to be seen whether the revival plan by TranSwitch is acceptable to the Panel for granting permission for continued listing or whether it decides to suspend trading.

TranSwitch provides Innovative integrated circuit (IC) and intellectual property (IP) solutions, which help the customer and network infrastructure segment in delivering core functionality for video, voice and data communications equipment.

TranSwitch currently carries a Zacks Rank #3 (Hold). Some other stocks in the same sector include Integrated Device Technology, Inc. (IDTI - Free Report) , OmniVision Technologies, Inc. , each carrying a Zacks Rank #1 (Strong Buy) and FormFactor Inc. (FORM - Free Report) carrying a Zacks Rank #2 (Buy).

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