The shares of computer-chip testing firm Aetrium Inc. shot up more than 40 percent Friday, a day after it took the unusual step of acquiring an unrelated business in the housing industry.
Since 1982, the firm has been building machines that handle and test computer chips. But on Thursday, the electronics firm announced that it had acquired the assets of a commercial and residential modular housing business from Maine-based KBS Building Systems for $11.9 million.
"They are very different businesses, and we will operate them separately," Paul Askegaard, Aetrium's treasurer and secretary, said in an interview Friday. "We're in transition. We had a management change a few months ago, and we thought this was a good opportunity for long-term growth in shareholder value."
The effect in the stock market was immediate. Shares in the North St. Paul firm jumped 42 percent, or $1.80, to $6.10 on Nasdaq Friday.
It was a striking change of fortune for a stock that has plummeted more than 61 percent over the last five years, 46 percent in the last year alone.
No analysts follow Aetrium, which has had $13.8 million in cumulative net losses in the past three years.
Askegaard declined to comment on the diversification move, or whether the firm planned to exit the computer chip testing market, where it is a relatively small player.
The move into an unrelated business field follows Aetrium's fight with dissident shareholders last year over the company's lackluster financial performance. The battle was resolved in a settlement that gave the dissidents five of 11 board seats. Subsequently, CEO Joseph Levesque was replaced by Daniel Koch.
The diversification into modular housing appears related to the company's hopes to generate earnings that could be partly sheltered from taxation through its accumulated $76 million in tax loss carryforward. The carryforward reduces a company's tax liability during a high-earning year by including earlier losses to reduce taxable income.
Earlier this year, board chairman Jeff Eberwein called the tax loss carryforward "a significant asset." However, the company warned at the time that "Aetrium's use of those tax assets could be substantially limited if the company experiences an ownership change."
As a result, Aetrium's board in February adopted a "Tax Benefit Preservation Plan" that would dilute the ownership of any shareholder that tried to increase its holdings to 5 percent or more of Aetrium's shares without board approval. To take effect, shareholders must approve the plan at the annual meeting in May.