Coherent gets warning from NASDAQ on non-compliance

SANTA CLARA, CA—On December 3, Coherent announced that the NASDAQ board of directors extended a December 4 deadline to file late periodic reports to December 17, 2007.

SANTA CLARA, CA—On December 3, Coherent announced that the NASDAQ board of directors extended a December 4 deadline to file late periodic reports to December 17, 2007. The anticipated NASDAQ Staff Determination letter also indicated that the company is not currently in compliance with NASDAQ’s listing requirements as set forth in Marketplace Rules 4350(e) and 4350(g) due to its failure to hold an annual meeting of stockholders during its fiscal year ended September 30, 2007. The notice stated that, in addition to the past-due periodic reports, the failure could serve as an additional basis for delisting of the company’s securities. In the event Coherent does not file the reports with the Securities and Exchange Commission (SEC) by December 17, 2007, the NASDAQ board of directors informed Coherent that its common stock will be suspended from trading at the opening of business on December 19, 2007, and NASDAQ will file a Form 25 with the SEC to effect the delisting of Coherent’s common stock.

The problems started last year when NASDAQ initially informed Coherent on December 19, 2006, that its securities would be delisted due to the company’s delay in filing its Form 10-K for the fiscal year ended September 30, 2006, unless the company requested a hearing in accordance with applicable NASDAQ Marketplace Rules. The company subsequently requested and was granted a hearing before the NASDAQ Listing Qualifications Panel on February 15, 2007, to request an extension for continued listing on the NASDAQ Global Select Market.

On April 3, 2007, the Panel granted Coherent a conditional extension to file its Form 10-K for the fiscal year ended September 30, 2006, its Form 10-Q for the quarter ended December 30, 2006, and any required restatements. Then, in a letter dated May 18, 2007, the NASDAQ Listing and Hearing Review Council reviewed the Panel’s decision and determined to stay any decision to suspend the Company’s securities pending further action by the Listing Council.

According to a Coherent press release, “Although the Company is working diligently to file its delinquent filings, there can be no assurance that the Listing Council will grant an extension for continued listing.” Shares of Coherent common stock will continue trading on the NASDAQ pending the Listing Council’s decision. Coherent said on its fourth quarter (Q4) call that it planned to file its fiscal year ’06 (FY06) 10-K and its Q1 FY07 10-Q by mid-December and its Q2 and Q3 FY07 10-Qs in the beginning of calendar year 2008. In the press release, Coherent said it cannot meet that deadline but plans to file its FY06 10-K by December 17 and the three 10-Qs by January 31, 2008. The company does not expect to hold an annual meeting of stockholders until after it has filed its annual report on Form 10-K for the fiscal year ended September 30, 2006.

Regarding the warning, investment banking firm Needham & Company, LLC (New York, NY) announced a withdrawal of their “buy” rating. “Since we cannot determine whether Coherent will be able to receive another filing extension from the NASDAQ in time to avert a delisting, we are withdrawing our rating until we receive further clarity,” said John Harmon, chief financial analyst at Needham & Company. “Our thesis on Coherent is that the company should grow faster than the laser market through its broad and unique product line, while experiencing above-average margins due to the economies of scale from being the world’s largest publicly traded laser manufacturer.”

Coherent said that it is exploring alternatives to prevent the suspension of trading of its stock on December 19, 2007 as well as its delisting, including seeking relief from NASDAQ’s board of directors and the SEC. If the stock is delisted, then once Coherent becomes current with its filings and holds an annual meeting, it can be relisted 30 days thereafter. In the event that Coherent’s common stock is delisted from trading on NASDAQ, it will be traded over the counter.—Valerie C. Coffey

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