Faroudja Falters, Shuffles Management

High-resolution video technology leader Faroudja, Inc. announced October 6 that Glenn W. Marschel, Jr. has been named its new President, CEO, and Co-Chairman of the Board of Directors. Mr. Marschel is replacing Michael Moore, who resigned "to pursue other interests." Chief Technical Officer and company founder Yves Faroudja will become the board's other Co-Chairman. William J. Turner will step down as Chairman, but will remain as a Director of the company.

The announcement accompanied a report of diminished expectations for the third quarter, including a loss of $0.15 per share, which the company attributed to slow sales at the low end of the home-theater and DVD-player market. Faroudja has a long tradition of being at the forefront of high-end video, but has been less successful in the mass market. A third-quarter report is due this Thursday, October 15.

Faroudja's stock has lost approximately 75% of its value in the past five months. It reached a peak of $12.75/share on May 15, and gradually spiraled down over the summer. Tech stocks have taken an especially hard beating in the past two weeks, during which Faroudja hit a low of $2.31. On Friday, October 9, the stock closed at $3.19, up almost 11%, in part due to the company's announcement three days earlier.

Investors and executives have hopes for the company's Digital Format Translator, a device that has recently begun shipping to broadcasters, including Fox Broadcasting and Warner Bros. Television Affiliates. The device upconverts analog and digital NTSC sources to all of the new digital and high-definition formats, allowing TV studios, cable services, and satellite providers to continue using their present equipment and film and program libraries. In addition to commercial video technology, Faroudja makes high-end products for the PC/TV convergence and home-theater markets, and is making headway in set-top all-format converter boxes, a market segment likely to swell during the transition from NTSC television to HDTV. The company and its founder hold more than 50 patents for video processing technology.

Marschel, who most recently served as President and CEO of PageNet, expressed optimism about Faroudja's future, calling the present "an exciting period of challenge and growth" for his new company. "We are well-positioned to take advantage of these new opportunities, particularly in the HDTV broadcast market." Marschel said he was enthused about the opportunity to work with Yves Faroudja, whom he called "a true visionary in the fields of video-signal and video-image processing."