SAN FRANCISCOMobile TV chip vendor Telegent Systems Inc. Thursday (May 6) canceled plans for an upcoming initial public offering (IPO) of common stock, saying the company has sufficient cash on hand to invest in future growth. Telegent also announced plans to search for a new CEO to replace co-founder Samuel Sheng, who will continue as the company's chief technical officer.
According to Dianna Jovin, Telegent's vice president of corporate marketing and business development, the company ended its most recent fiscal year with $150 million in cash that it can use for investment.
"We are in a very strong position from revenue and cash standpoint," Jovin said. "A lot of companies go for an IPO so they can get the cash they need to make necessary investments. We decided it was in our interest and in our customers' best interest to move forward as a private company."
Jovin added that Telegent (Sunnyvale, Calif.) would likely pursue an IPO at some point in the future. She acknowledged that the withdrawal of an IPO is an unusual step. "We are developing a reputation for doing the unconventional thing," she said.
In a statement, Sheng said, "We are able to pursue our growth and diversification goals with the working capital generated from our operations as a private company, and are choosing to invest in the technology and leadership that will carry us forward before we enter the public market."
Sheng, who has served as Telegent's CEO since the company's inception in 2004, asked Telegent's board of directors to begin a search for his successor in preparation for planned organizational growth, the company said. Sheng wants to concentrate on his role as CTO to further develop and expand Telegent's technology platform, the company said.
Telegent filed a registration statement with the U.S. Securities and Exchange Commission for a proposed IPO of common shares in November 2009. The company withdrew the statement on Thursday.
Also Thursday, Telegent announced it has shipped 80 million units of its free-to-air mobile TV receivers since it launched the technology in mid-2007. The company claims to lead the market for mobile TV receivers.
Market research firm firm Forward Concepts Inc. estimates that 78 million broadcast TV handsets were shipped globally in 2009.
Telegent said it plans to broaden its product portfolio of "converged TV solutions."
Sheng said the company would continue to invest in the performance of its products. "We are developing silicon solutions for new geographies and exploring new forms of delivery and new methods of interaction with television content," Sheng said. "We plan to drive growth both through engineering investment and through acquisition."