A SPAC that went splat

(Fortune Magazine) -- Normally investors make decisions based on close evaluation of the fundamentals underlying a company. In a SPAC, or special-purpose acquisition corporation, popular Wall Street vehicles whose organizers raise money to spend on yet-to-be-determined targets, investors buy solely into the pedigree of the founders.

Which is why they were so quick to pour $173 million into Acquicor, a SPAC formed in 2005 by a supergroup of Apple (AAPL, Fortune 500) alumni - co-founder Steve Wozniak, former CEO Gil Amelio, and ex-senior executive Ellen Hancock. Instead, the trio turned that cash into a highly indebted company whose equity today is worth $15 million.

In early 2007, Acquicor bought a Southern California chip company called Jazz Semiconductor for $253 million (after returning $33 million to shareholders who wanted their money back instead). But the timing was terrible. Jazz sells to wireless companies like mobile-phone makers, who have been in a nasty downturn. Shares of Acquicor - renamed Jazz Technologies (JAZ) - have cratered from their IPO price of $6 to a recent 71 cents per share. On Feb. 13 the company retained UBS to explore "strategic alternatives."

The three amigos had a tough decade even before their most recent exploit. Amelio (no relation to Lenovo CEO William Amelio) ended his brief reign at Apple in 1997 when Steve Jobs returned. An investment and consulting firm that he headed, AmTech, declared bankruptcy in 2003. A similar fate met Exodus Communications, the web-hosting firm that Hancock ran. As for Wozniak, long gone from Apple, a wireless company that he founded called Wheels of Zeus shut down in 2006.

These days things are lonely at Jazz. Hancock resigned as president in June 2007, followed by Wozniak, who had been an unpaid "chief visionary officer," in February. The 65-year-old Amelio is hanging on in comfort: In December the SPAC's management company, controlled by Amelio, netted $4 million by selling shares acquired for pennies. Amelio declined repeated requests for comment. In mid-February, however, he told investors he had succeeded in taking Jazz "from a two-fiddle orchestra to a ten-fiddle orchestra" and that he's "laying the foundation for a much better future." In the tech world, as on Wall Street, hope springs eternal.