Former Tektronix chief executive will step in as chairman of the board.
BY JACOB PALMER | OB DIGITAL NEWS EDITOR
Electro Scientific Industries’ leaders said Monday the company will suspend its quarterly dividends as well as a change to the board.
The company sent out a news release explaining their reasoning:
“We are in the middle of a major turnaround at ESI to return to long-term growth, profitability, and cash generation,” ESI’s president and CEOEdward Grady said. “Our revitalization effort involves leveraging our recent acquisition of Topwin, gaining high-volume adoption of new products, and expanding our sales channel.”
“These opportunities require us to deploy qualification units, ramp laser production, field demo equipment, and fund growth in receivables,”Grady said. “While our balance sheet is solid, our board believes we should concentrate our financial strength on growing the company and maintaining adequate financial flexibility.”
The company also announced former Tektronix chief executive Rick Wills is replacing Jon Tompkins as chairman of the board. Tompkins’ age precludes him from serving another term after this one ends in August.
OregonLive.com’s Mike Rogoway reports on how the company got to the point of suspending its dividend:
ESI began paying an 8 cent quarterly dividend in 2011. The company had accumulated more than $200 million in cash and investors – led by ESI board member David Nierenberg – campaigned for the company to return some of that money to its owners.
Since then, though, ESI’s prospects have steadily diminished. The company’s key market, selling manufacturing tools to memory chip makers, evaporated. ESI replaced its chief executive last year and has begun trying to develop laser tools for other markets. Revenue grew last quarter, but new CEO Ed Grady has repeatedly warned that the company has a long road ahead.
