Tech firm’s shares recover after analyst’s clean bill of health

SHARES in technology company IQE have recovered from their dramatic falls at the beginning of the week as a leading analyst stepped in to dispel any doubts about the company’s joint venture with Cardiff University.

Analysts from investment managers Canaccord visited IQE’s facilities Newport last Friday to confirm for themselves the authenticy of the Compound Semiconductor Centre (CSC) joint venture in which IQE is a partner with Cardiff University.

The company makes semiconductor wafers used in mobile phones and other applications such as solar panels.

The visit came after hedge fund ShadowFall published a report last week in which it cast doubt on the joint venture and on IQE’s governance and accounting practices.

The report had previously been circulated privately by ShadowFall in early December.

ShadowFall took a short selling position in IQE, as did Muddy Waters, another hedge fund which issued a similar report at the beginning of this week, accusing IQE of being “an egregious manipulator.”

Muddy Waters also claimed IQE had inflated its profits and that the CSC was “dominated” by IQE and that it was not a separate organisation.

Paul Moreland, senior analyst at Cannaccord, said: “Following the release of ‘bear reports’ last week that questioned the validity of the CSC joint venture, we decided to see for ourselves. During our visit we walked around CSC’s premises and met with its CEO. accounting

“We note that late on Friday the University of Cardiff made an announcement rejecting the claims made in the ‘bear reports’ and this announcement has since been released by IQE together with notification of a change of auditor to KPMG from PwC [PricewaterhouseCoopers], who have been in place since 2005 and leave with a statement saying there are no matters that need to be brought to the members’ attention.

“This release, together with our own visit to the site, leaves us fully convinced of CSC’s existence, that it has its own employees, an independent board and, most importantly, it looks set to be a significant player in the south Wales compound semiconductor cluster that is being enthusiastically supported by the UK Government as it attempts to bring manufacturing jobs back to the UK.”

IQE announced yesterday that KPMG was replacing PricewaterhouseCoopers (PwC), who had acted as the company’s auditors since 2005.