Our knee-jerk reaction to a fast-growing upstart company can be to assume it’s a fluke. Laguna Beach-based Arbitech LLC says believe it.
According to a recent story in trade publication Computer Reseller News, Josh McCarter, Arbitech’s chief operating officer, says “everything is fully legit.”
“You don’t grow a $100 million business without being fully legit,” he said.
The quote comes after a story detailing how the Laguna Beach computer distributor can sell servers for up to 15% less than bigger distributors, making the company a good second supplier of technology gear to biggies such as Santa Ana’s Ingram Micro Inc. and Florida’s Tech Data Corp.
Arbitech was founded by Torin Pavia, a 33-year-old entrepreneur who started the company as a pet project while studying at the Univers-ity of Southern California’s Marshall School of Business.
Arbitech puts a twist on the distribution of computer products. It uses arbitrage, a trading technique where a trader makes a profit from a buy in one market and a sale in another market.
Arbitrage long has been used in currency markets where traders buy and sell at favorable price differences. Pavia said he noticed that in computer products, resellers often have too much inventory that isn’t returnable.
At the same time, other resellers need the product but can’t get favorable pricing from the big distributors.
IPO Guy at Jazz
Jazz Semiconductor Inc., the Newport Beach contract chipmaker, still seems set on an initial public offering,at least if you look at the company’s most recent hire.
The company, an offshoot of Newport Beach-based Conexant Systems Inc., appointed Brent Jensen as its chief financial officer.
What’s interesting is Jensen, a chip industry veteran, helped chipmaker AMIS Holdings Inc. do a $600 million public offering in 2003.
“Jensen’s long history in the semiconductor industry coupled with his financial expertise is an ideal complement to our strong management team,” said Shu Li, Jazz’s chief executive. “His appointment will aid in the development and execution of our strategic initiatives moving forward.”
Last month, Conexant Chief Executive Dwight Decker told the Business Journal that Jazz could go public as early as next year.
“I’m certainly hopeful it is going public sooner rather than later,” said Decker, whose company still holds a sizable Jazz stake.
Jazz withdrew its filing for a stock sale after the Securities and Exchange Commission approached the company about updating the document, originally submitted in early 2004.
“I would have been happy just to leave (the registration statement) there, but there are rules,” Decker said.
Jazz opted not to go public during the slow summer months, according to Decker. So the company withdrew the filing to refile later, he said.
The offering was expected to be one of the larger ones of late for Orange County. Credit Suisse First Boston and Lehman Brothers were the lead underwriters.
As originally billed, Jazz’s offering was projected to raise as much as $150 million.
A Jazz offering is a key part of Decker’s long-running restructuring of Conexant, in which he’s sold off businesses and done another spinoff, that of Newport Beach-based Mindspeed Technologies Inc. in 2003.
New Interchange COO
Laguna Hills-based Interchange Corp. hired a new operations chief,Bruce Crair, who’s spent time at wireless and Internet companies.
Crair is responsible for the day-to-day operations of Interchange as well as strategic planning including product and business development, the company said in a statement.
“He has great experience in fast growing organizations,” said Heath Clarke, Interchange’s chief executive.
Most recently, Crair was cofounder and operations chief of West Hollywood-based ZeroDegrees Inc., an online business and social networking service, which was bought by Barry Diller’s IAC/ InterActiveCorp last year.
“Heath and I spent a lot of time talking about the business here at Interchange,” Crair said. “We’re really good fits. Heath has built a great company over here.”
Crair replaces Michael Sawtell, who left the company for undisclosed reasons.
Smith Micro Buy
Aliso Viejo-based Smith Micro Software Inc. is buying Watsonville-based Allume Systems Inc. for $12.8 million.
Smith Micro makes a range of software for sending faxes, videoconferencing and for placing phone calls via the Internet. Allume makes software that compresses and archives data.
Smith Micro is set to pay $11 million in cash and $1.75 million in stock to buy Allume.
“Allume’s compression technology and their talented employees bring us a new opportunity as we continue to expand our product offerings to wireless carriers and handset providers,” said William Smith, Smith Micro’s chief executive. “With the explosive expansion of camera wireless phones and mobile devices, handset providers continue to need additional storage for all of this data, be it pictures, full motion video or audio.”
