News & Analysis
Analog Devices' CEO:'Our enemy is us'
Junko Yoshida
12/3/2009 1:30 PM EST
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| Jerry Fishman CEO, Analog Devices, Inc. |
MANHASSET, NY — Although leading analog chip vendors, including Analog Devices Inc., Texas Instruments, Linear Technology and Maxim Integrated Products, have all recently come out with "better than expected" quarterly results, nobody is declaring the end of the global recession -- just yet.
Particularly, none of the analog chip companies -- typically a more conservative bunch -- are breathing easy. Cautiously, they report that customers are winding down their inventory corrections, and demand for their products is rebounding.
After very strong Q4 earning results, Jerry Fishman, Analog Devices' CEO, this week gave a rare interview to EE Times. He discussed the market, the company's recent reorganization and the promotions of senior executives, answering questions about a possible succession plan for Fishman -- at the helm since Nov., 1996.
Today, Fishman has every reason to feel good about himself and his company. ADI increased its Q4 revenues by 16 percent sequentially to $572 million.
After the earnings' call, Doug Freedman, analyst at Broadpoint.AmTech, upgraded ADI to "buy" from "neutral," noting that ADI "continues to grow in-line (or better) with analog peers and could possibly outperform given strength in emerging high-volume consumer opportunities (MEMS/accelerometers, HDMI, Analog front-ends)." Freedman added, "Gross margin continues to expand through fab consolidation, mix shift and higher utilizations."
Achieving such results is just shy of miraculous. Not long ago, ADI endured a period when "distributors, and in fact all the customers, just stopped, when the business went to hell. . . and the credit markets didn't allow people to borrow to buy inventories," Fishman recalled.
The good news is that distributors are finally beginning to build inventory. The even better news is that "they are not going out there and just randomly buying inventory," said Fishman. Instead, they're doing so with much more discipline.
Next: Semiconductor cycle
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Daithi Lacha
12/4/2009 8:26 AM EST
A load of New England Hogwash! When I joined ADI in 2000, the mantra was $5Bn in 2005! Look where it is now. The enemy is within indeed!
As for RF, ADI's prominence is in power detectors and PLL's, which are more like "fast analog" than real RF.
Get real Mr. Fishman.
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Tsantes
12/4/2009 1:56 PM EST
Hi Junko:
Great article on ADI. I might not say this to his face (perhaps I would), but Fishman gave up his analog franchise to TI half a dozen years ago and is now trying to recoup it. Back then, when we had them as a (PR) client, all he could say is how he wanted to grow his DSP business to kill TI. We lobbied against that positioning unsuccessfully through his marketing folks, but we couldnt convince them otherwise. They didnt want to get hammered by Fishman for talking out of school. Today, they havent given up on DSP, but have realized that they stand to loose their analog to a host of competitors...most noteworthy, TI, who at the time was pushing analog themselves when they had little analog to speak of other than its Burr-Brown purchase. TI was pushing analog as if they invented the term, having already established leadership in DSPs. TIs (marketing) strategy worked. As EE Times editor in my earlier days, I followed ADI and co-founder Ray Stata. I thought then, and do now, that ADI had some of the the best analog technology on the market. Others have great analog technology as well, but ADI was innovative and a pioneer in many areas. Perhaps they (and Fishman) are finally going back to their roots.
Cheers,
John Tsantes, President, Tsantes Consulting Group
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jyoshida
12/4/2009 3:16 PM EST
Hi, John. Historical context always makes stories interesting and it does teach us a few things.
As the market change, the company's strategy also changes. I fully get that.
But there is one thing that those of us who have been chronicling what's going on in this industry shouldn't do. That is to rewrite that history. So, in that sense, I am glad you chimed in. Thanks for your contribution.
Now here's my question. As companies like TI and Analog Devices begin throwing more weight behind analog, who are going to pick up DSP advancements where they left off?
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Tsantes
12/4/2009 3:24 PM EST
Good question, Junko. Perhaps the traditional MPU/MCU guys with ever-increasing performance and muti-core architectures will do that, adding more (DSP) functionality and making standalone DSPs obsolete. We'll have to wait and see.
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StillatADI
12/6/2009 6:56 PM EST
Daithi Lacha (aka Dave B),
A bit o sour grapes - don't taste too good do they? Time to move on, Dave
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Rick Merritt
12/6/2009 11:04 PM EST
The ADI experience sounds similar to that of National Semi. Former CEO Halla tried to turn it into a processor company buying Cyrix, but it didn't work and eventually he had to go back to National's roots as an analog company. It made sense for Halla to try to get into higher ASP products, but when the strategy failed, he took a long time letting go of it.
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Tsantes
12/10/2009 11:11 AM EST
The real problem with many companies is that they become successful in one area, their core competency, and then try to expand into other areas that they perceive as higher value (meaning higher margins) or ones that are technologically more "sexy." ADI and NSC are good examples, but there are more. IDT was doing great in FIFOs and Dual-Ports but then decided to by Centaur (an Intel-like mpu company) to get higher awareness in the food chain. The MIPS/Chipidea acquisition is another example of a company (MIPS) trying to be something (Analog) it is not. Successful companies stay the course unless a new competency (acquired or developed) is truly complementary to its technology "ladder." Eventually, they always return to their core with tails between their logs, or go down.
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