The shares dropped 46% on Friday due to Siemens dumping their 11% stake via a market placing at 6p. This is very unusual and it’s not a fundraise. It looks to me like a fall out between Sondrel and Siemens, who took an 11% stake at ipo for £5.8 mil and only got £0.58 crumbs for it. They must have been pretty pissed off with to dump the shares like that via a 3rd party broker, it’s a very unusual and a very rare event. I suspect the fall out is due to Sondrel implementing competing and more advanced EDA ( electronic design automation) technology from Synopsys. The EDA forms the core of the ASICs they sell but more importantly, they have lifetime revenue potential. Ie: Sondrel designs a circuit for a client (OEM) then also provides that client with components during the life cycle of that product ( production revenue) by acting as a middleman between the producer (Synopsys) and OEM, whilst taking a small cut in the process. It’s complicated, but the OEM cannot go directly to the manufacturer.
In Sept the co confirmed 3 ASIC prototypes were delivered to customers with a combined lifetime production revenue of $ 170mil. So you can see why getting inside the ASICs is so important for SND’s suppliers as well.
That’s my take on the share sale, otherwise why behave like this ?! Siemens is a multi billion co and they certainly don’t need the money, they keep buying and selling co’s in this field, trying to position themselves in the semis market. If the relationship was still amicable they would have had an orderly sale via the SND’s broker but the small amount involved suggests they wanted to damage the sp.
The 9,8 mil shares dumped at 6p ( worth £0.58 mil) will most likely be flipped for a quick profit but that should be easily absorbed by the market. The cash is also tight so a fundraise and further short term volatility cannot be ruled out. If that happens, I will look for the type of institutional support. The ceo already owns 44% of the co and I don’t think he will buy any more shares. Also SND is geared to the world economy but even so, with its peer Ensilica valued at £43 mil and mid term prospects of £100 mil revenue/ year intact, this is no fugazi.