Compiled by Julie Leupold
TOP STORY
Tustin-based Cherokee International Corp., a maker of power supply gear for electronics that’s been shopping itself since April, is being sold for $105 million in cash. Lineage Power Holdings Inc., part of Los Angeles-based private equity firm Gores Group LLC, is buying Cherokee. Lineage is paying 33% more than what Cherokee’s shares were trading at before the offer.
TECHNOLOGY
Costa Mesa’s Irvine Sensors Corp. said it’s working out a plan with lenders to pay down debt. The move likely is designed to avoid a potential bankruptcy filing. Irvine Sensors is set to sell a subsidiary, Texas-based Optex Systems Inc., for a minimum of $15 million to pay back its two biggest lenders. After the sale, Irvine Sensors projects having roughly $4 million in debt, which is set to be converted into stock.
Concerns that Broadcom Corp. could issue a warning on third-quarter results dragged down the chipmaker’s stock for a time last week. Some hedge fund managers are shorting Broadcom shares, betting the stock has further to fall, according to a Barron’s report. In July, the company cautioned that third-quarter gross margins could come in at 49.5% to 51.5%, down from 53.8% in the second quarter. In other Broadcom news, a federal appeals court upheld an earlier decision that Qualcomm Inc. infringed on two of its chip patents. The court also upheld a ban on certain Qualcomm chips and denied Qualcomm’s request for a new trial. The companies are said to be in renewed settlement talks.
A Cowen & Co. analyst downgraded Irvine-based Epicor Software Corp.’s stock on concerns about slimmer profits and slower sales at the company’s target customers. Peter Goldmacher lowered his rating to “underperform” from “neutral.” He also lowered his outlook for this year’s profits to about $45 million on sales of $522 million. That’s below Wall Street’s average estimate of $45 million in profits on sales of $524 million. Next year, he is expecting profits of about $55 million on sales of $567 million.
HEALTHCARE
Irvine-based Biolase Technology Inc. received its first Japanese patent for its product that uses water particles to cut soft tissue. Gaining Japanese approval to sell Biolase’s core Waterlase device “is a key part of a more focused and profitable expansion strategy into key international markets,” said Jake St. Philip, the device maker’s chief executive, in a release.
Ista Pharmaceuticals Inc. said that three long-term shareholders agreed to provide it with up to $65 million worth of funding. Deerfield Management, a New York-based healthcare investment fund, along with the Sprout Group and Sanderling Ventures, two Bay Area firms, are providing the funding through a flexible credit line. In conjunction with the new funding, Ista paid off $40 million of debt. The deal also allows the drug maker to draw up to an additional $25 million at any time during the next 12 months.
REAL ESTATE
Irvine Company laid off 100 employees due to the housing slump, the weak economy and two years of declining land sales, according to a company memo sent to its staff members. The layoffs amount to nearly 3% of the land developer’s 3,800-person work force. It’s the first time since 1992 that the county’s top land owner has laid off workers.
Santa Ana-based real estate brokerage and investor Grubb & Ellis Co. was added to the New York Stock Exchange’s recently created short-selling ban list. The list was started two weeks ago by the Securities and Exchange Commission to crack down on short selling of financial companies amid the ongoing economic crisis. Grubb & Ellis, which counts a market value of about $200 million, appears to have been added for the business of raising money to invest in office and other buildings, rather than for its commercial real estate brokerage business.
APPAREL
Foothill Ranch-based retailer Wet Seal Inc.’s Arden B. chain is showing progress on a turnaround but faces a tough retail market and holds the prospect of a sale or closure, an analyst said. Raymond James & Associates Inc. analyst Samantha Panella said she expects operating profits at Arden B. to remain “well below” those of the company’s dominant Wet Seal chain.
MKM Partners LLC analyst Linda Tsai downgraded Anaheim-based Pacific Sunwear of California Inc. from “neutral” to “sell,” saying the company is struggling to shed clearance items and faces increased competition.
FINANCE
Newport Beach-based savings and loan operator Downey Financial Corp. appointed Charles R. Rinehart as its chief executive. The banking veteran takes over from Thomas E. Prince, who had been serving as its interim chief executive since July and who will stay on as a senior executive vice president.
ECONOMIC INDICATORS
Mixed: Orange County home prices, which fell another 4.9% in August from July but showed sales up more than 30% from a year earlier, the California Association of Realtors said.
