At Celeritek, Things Could Really Accelerate

A big battle is brewing at Celeritek (CLTK ), a maker of semiconductor components used in transmitting voice, video, and data over wireless systems. A group that controls 10% of the stock is seeking to oust the board to stanch Celeritek's financial bleeding and to consider buyout bids as a way of enhancing shareholder value. Posting losses in the past four years, the stock tumbled from 11 a year ago to 5 in mid-November. It moved up recently, to 7.89, helped by the pending proxy fight.

"We have informed the board that we'll look at all possible alternatives, including selling the company," says Steven Balet of proxy solicitor firm MacKenzie Partners, which represents the Celeritek Shareholder Protective Committee. Last August, Celeritek rejected an $8.75-a-share bid by Anaren -- a 25% premium at the time. The dissidents, which include Bryant Riley, chairman of investment firm B. Riley, who owns 6%, says the board refuses to dismantle its "tools of entrenchment," including a poison pill.

In response, Chairman and CEO Tamer Husseini hired Lehman Brothers to explore means of boosting shareholder value. CIBC World Markets, which has done banking for Celeritek, estimates the company will lose $1.24 a share in the year ending Mar. 30, 2004, vs. a projected 2003 loss of 73 cents.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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