Trident Microsystems announced an update to its outlook for the fourth quarter of fiscal year 2009.

Trident’s outlook for the fourth quarter of fiscal year 2009, described below, is based on current expectations, includes expected results from the recently completed acquisition of certain consumer business division assets from Micronas.

� Net revenues are expected to be in the range of $15 to $18 million.

� Gross Margin in the low 30% range.

� Non-GAAP operating loss is projected to be in the range of $15 to $17 million.

� The company expects to end the quarter with a cash balance of approximately $177 to $182 million.

TRID currently has $55 million in liabilities, and it is trading at a market cap of $92 million, well below the company’s net cash value.

Off-Balance Sheet Arrangements 

At March 31, 2009, the Company had purchase commitments in the amount of $9.3 million that were not included in the Condensed Consolidated Balance Sheet at that date. Among the $9.3 million of purchase commitments, $1.6 million of these commitments were to UMC, its principal foundry. Purchase commitments represent the unconditional purchase order commitments with contract manufacturers and suppliers for wafers and software licensing.

Shareholder Derivative Litigation

Trident has been named as a nominal defendant in several purported shareholder derivative lawsuits concerning the granting of stock options. The federal court cases have been consolidated as In re Trident Microsystems Inc. Derivative Litigation, Master File No. C-06-3440-JF. A case also has been filed in State court, Limke v. Lin et al., No. 1:07-CV-080390. Plaintiffs in all cases allege that certain of the Company’s current or former officers and directors caused it to grant options at less than fair market value, contrary to its public statements (including its financial statements); and that as a result those officers and directors are liable to the Company. No particular amount of damages has been alleged, and by the nature of the lawsuit no damages will be alleged against the Company. The Board of Directors has appointed a Special Litigation Committee (“SLC”), composed solely of independent directors, to review and manage any claims that the Company may have relating to the stock option grant practices investigated by the SLC.

Regulatory Actions

The Department of Justice (DOJ) is currently conducting an investigation of the Company in connection with its investigation into its stock option grant practices and related issues, and the Company is subject to a subpoena from the DOJ. The Company is also subject to a formal investigation by the SEC on the same issues.

Disclosure: We do not own TRID, but it is part of our ValueHuntr Portfolio.