Zoran Blasts Shareholder As Trying to ‘Seize’ Control of Board

Zoran fired back against an investment firm late Monday, accusing it of trying to “seize” control of the company’s board and putting its “short-term” interests ahead of other shareholders’. Ramius, seeking to replace Zoran’s board, last week argued that the “upside down cost structure” of the company’s TV and DVD business stemmed from “unclear and misguided long-term goals” (CED Dec 10 p1). Ramius owns 8.3 percent of Zoran and is Zoran’s second largest shareholder, after the Blackstone Group at 10 percent.

Zoran said it’s cutting DTV-related operating expenses 15 percent in 2011 and is shifting the focus of the business to tier one TV manufacturers. The company previously built its business on a roster of mid-to-low-end suppliers that included Funai, but the new strategy is expected to return DTV to break-even by mid-2011, the company said. Zoran has secured design wins with tier one customers, and the addition of recently acquired Microtune and its silicon tuners will benefit the company, Zoran said. Microtune is expected to add to Zoran’s earnings by Q1, the company said.

"We believe that our new product portfolio, particularly our multi-standard DTV, 3DTV and TV connected” chips as well as frame rate conversion ICs “positions us well to take additional market share in DTV,” Zoran said. “With Microtune, we believe Zoran will become a complete provider of solutions for home entertainment, immediately accelerating our position” in set-top boxes and “strengthening” the company’s portfolio in TV. The DTV business will “contribute substantially” to growth and “profitability in 2012 and beyond,” Zoran said.

In DVD, Zoran is scaling back, the company said. It cut staffing 70 percent and is keeping only the employees needed to support current customers, Zoran said. The cost cuts will allow the DVD group to turn a profit in Q1, the company said. Zoran is continuing with profitable digital camera and printer chip businesses.

Ramius is proposing replacing the six independent directors on Zoran’s board with a slate that includes Jon Castor, Dale Fuller, Thomas Lacey, Jeffrey McCreary, Jeffrey Smith and Edward Terino. Zoran CEO Levy Gerzberg is the only management representative now on the board.