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IQE and CSC bite back at short-sellers
IQE and its joint venture with Cardiff University released a statement on Monday defending the latter's accounting practices after they were placed under the microscope last week.
The venture, called the Compound Semiconductor Centre (CSC), came under scrutiny twice in the past month from reports courtesy of short-sellers ShadowFall and Muddy Waters, with the latter describing the venture's accounting as "possibly designed to deceive investors."
The two reports have played havoc with IQE's share price, sending the stock 14% lower following ShadowFall's report on 2 February and then a further 10% on 8 February after Muddy Waters had its say.
Both reports alleged that IQE, which manufactures compound semiconductors for Apple's latest iPhone's 3D camera sensors, has misrepresented its profits, with Muddy Waters claiming that IQE's true profits in the first half of the year were 69% less than it reported after it used CSC to shift losses from its records.
CSC's statement said: "Cardiff University has invested equity of £21.8M in the Compound Semiconductor Centre. IQE contributed their share in hardware, infrastructure and licensing intellectual property, all independently valued. The University entered into the Joint Venture as a strategic investment to ensure our world leading research has a well-founded route to commercialisation."
Meanwhile, IQE confirmed the appointment on Monday of KPMG as its new auditor as it seeks to quash the negativity induced by what it referred to as "two recent broadly similar and misleading reports" from funds which both hold a short position in IQE.
In a statement, the technology firm said: "the Company wishes to go above and beyond the disclosure requirements as stated under the AIM Rules. The Company holds itself to the highest standards of transparency, governance and integrity."
As of 1019 GMT, IQE's shares had risen 5.37% to 105.90p.