Rakon investors air frustration at poor results

Rakon is anticipating a return to profit in 2015. Photo / Paul Estcourt

Lack of dividend payments from the high-tech firm maker labelled 'a disgrace'

Rakon shareholders got a chance to vent their disappointment about the company's poor financial results and languishing share price at its annual meeting in Auckland yesterday.

One elderly investor told the board that the lack of dividend payments from the high-tech electronic components maker was "a disgrace".

"You were the darling of the sharemarket - now you're the disaster," he said.

Rakon shares, which were worth almost $6 in 2007, fell 1c, or 4.3 per cent to close at 22c last night.

In a trading update released less than an hour before the start of yesterday's meeting, the company said it was anticipating a net loss after tax of $54 million for the year to March 31, 2014, compared with the $32.8 million net loss it reported for its last financial year.

The firm said $37 million of the full-year loss was expected to come from investment and asset impairments involved in selling an 80 per cent interest in its Chinese manufacturing operation, Rakon Crystal Chengdu (RCC), while the remaining $17 million would come from trading results.

The New Zealand Shareholders Association opposed the re-election of chairman Bryan Mogridge at yesterday's meeting.

Craig Priscott, who represented the association at the event, highlighted a slew of earnings downgrades Rakon had issued over the past year and said the company had lost credibility.

"In the association's view, once a listed company has lost credibility, it's almost impossible [to regain] its credibility without changing the key personnel involved," Priscott said.

The investor group also opposed the re-election of marketing director Darren Robinson.

But despite its opposition, both Robinson and Mogridge were re-elected.

Shareholders also approved the sale of the 80 per cent stake in RCC - which the company commissioned in 2011 to produce crystal oscillators for the smart wireless device market - to the ZheJiang East Crystal Electronic Co (ECEC) for US$18.8 million.

Rakon made the decision to sell down its interest in the factory following a sharp drop in the prices it was receiving for the products it was supplying to makers of smart wireless devices, such as smartphones and tablet computers.

It blames the pricing decline on a huge devaluation in the yen, which enabled Rakon's Japanese competitors to drop prices and grab market share.

The proceeds of the factory sale will be used to reduce Rakon's debt and the company will retain a strategic partnership with ECEC.

Mogridge told shareholders that he was very conscious of the firm's recent "rubbishy" performance.

But after exiting its Chinese manufacturing operation the company would be ready to "fight another day in markets we know and can do very well in", he said.

Rakon said its core focus had moved away from smart wireless devices towards supplying products into three major market segments - global telecommunications infrastructure, the avionics, space and defence industries and specialised global positioning system (GPS) devices.

The company is anticipating a return to profit in the 2015 financial year.