Entropic To Evaluate Strategic Alternatives; Stock Up - Update

(RTTNews) - Shares of Entropic Communications Inc (ENTR) gained about 8 percent on Tuesday, after the semiconductor company authorized the evaluation of strategic alternatives to enhance shareholder value. The company, which has been posting successive losses, also slashed its outlook for the current quarter, citing order delays for the remainder of the year.

Entropic said it has engaged investment bank Barclays in connection with its strategic evaluation, with the board to consider a wider range of alternatives toward that end.

"Our Board of Directors and management are committed to taking the appropriate steps to enhance value for Entropic shareholder...," said CEO Patrick Henry.

The company said there can be no assurance that the board's exploration of strategic alternatives will result in a transaction.

Detailing its expectations for the third quarter, Entropic said it now expects adjusted loss of $0.15 a share and revenue of about $43 million. It earlier expected a loss of $0.11 a share and revenue of $49 million to $51 million.

Analysts polled by Thomson Reuters expect a loss of $0.11 a share and revenue of $50.2 million for the quarter. Analysts' estimates typically exclude special items.

Entropic said revenue for the third quarter was somewhat hurt by less seasonal strength in the Direct Broadcast Satellite or DBS Outdoor Unit or ODU business, and some weakness in legacy set-top box (STB) system-on-a-chip (SoC) products. Entropic expects continued softness in the fourth quarter due to delays in new product deployment.

In July, Entropic slipped to a loss in the second quarter, hurt by lower revenues and higher operating expenses.

Entropic, based in San Diego, California, provides semiconductor solutions for the connected home. The company transforms how traditional HDTV broadcast and IP-based streaming video content is seamlessly and securely delivered, processed, and distributed into and throughout the home.

Entropic stock is trading at $2.96, up $0.22 or 8.03%, on a volume of 1.9 million shares.