Maxwell Technologies Inc. (NASDAQ: MXWL) lost nearly 11 percent in recent trading (closing at around $8 per share) on news of the company’s announcement that it will need to restate its books for fiscal years 2011 and 2012. The news has triggered investigations by several law firms representing investors across the country for possible Federal Securities Law violations. The changes to the company’s books are expected to result in a decrease in revenues of around $6.5 million in 2011 and $5.5 million in 2012.
Maxwell Technologies Inc. is a San Diego, California maker of products for energy storage and power delivery. The company also provides solutions to the satellite and space industry. News of the investigation and possible charges has affected the company adversely. If a violation of Federal Securities Laws did take place, the company will find itself in a financial free fall from which it may not recover.
KEMET Corporation (NYSE: KEM) is a Simpsonville, South Carolina based manufacturer of capacitors. This company trades at around $7 per share. The company’s debt ratio is 67 percent, which appears more realistic than the debt ratio of Maxwell Technologies Inc., which is 28 percent. KEMET Corporation is capitalized at around $307 million and is currently trading at around $7 per share. It has a liquidity measure of 1.5, which is just below the quick ratio of Maxwell Technologies Inc. at around 1.6.
AVX Corporation (NYSE: AVX), has a higher market capitalization of around $2 billion. It is liquid, with a quick ratio of around 4. Its debt to equity ratio of around 30 percent and debt ratio of 23 percent, which are both lower than the debt measurements of Maxwell. This Fountain Inn, South Carolina manufacturer and supplier of electronic components, trades at around $12 per share; nearly 90 percent of its 52 week high of $14. AVX Corporation is making moves to increase its market share through the acquisition of a capacitor business from competitor Nichicon Corporation (6996: Tokyo). It may be in position to benefit from any loss of business that will occur as a result of any and all Maxwell Technologies Inc investigations.
The impending investigation will, over the next several months, impinge negatively on the company’s stock. Charges that Maxwell Technologies will lose around $12 million due to the misstatements of fiscal years 2011 and 2012 may lead to further changes in the company as shareholders seek answers to their questions regarding this serious misstep.