After investing in venture, Simtek posts $2.46M loss

Simtek Corp. reported its biggest quarterly loss in nearly three years Wednesday, mostly from investing in a new venture the company hopes will pay off big.

The Colorado Springsbased semiconductor company lost $2.46 million, or 15 cents a share, in the January-to-March quarter, or about five times the $490,000, or 3 cents a share, it lost a year earlier. It was the biggest loss since the second quarter of 2005.

When good will and the cost of stock options are excluded from the first-quarter results, Simtek lost $1.62 million, or 10 cents a share, compared with a year-ago profit of $235,000, or 3 cents a share.

Simtek pumped $600,000 during the first quarter and will invest another $850,000 during the current quarter in AgigA Tech Inc., a new subsidiary that will develop and produce advanced high-density memory chips that could be used to replace computer disk drives.

"This is the largest investment in product development the company has ever been able to make," said Brian Alleman, Simtek's chief financial officer. "The company has never been in a position to invest in product development as it has and will continue to do."

Revenue during the quarter fell 7 percent from a year earlier to $7.32 million. Simtek said sales numbers would have been flat if final sales from a product line that has since been discontinued are subtracted from the first quarter 2007 total.

Simtek's sales were hurt by a slowdown in European sales that has begun to turn around, but sales in North America and Asia remain strong, said Harold Blomquist, Simtek's chief executive. Orders are increasing and should produce revenue in the next two quarters, he said.

"In light of challenging economic conditions across multiple geographic markets and some end-markets, we are pleased with the consistent strength in our core business in the first quarter and believe revenue to be in line with industry trends," Blomquist said.