Analogue semiconductor companies seem to be much more sensible and in tune with reality than their digital cousins. The analogue guys look for sustainability, which brings stability to their businesses and their employees, while the digital companies pursue a desperate quest for growth.
Analog Devices and Linear Technology have been around since God was young. ADI was founded in 1965 and LTC in 1981.
They make one to two billion dollars in annual revenues, have good margins, solid cash balances, stability, and a constant stream of advanced products developed from leveraging the creativity and intellect of their people.
Then look at the largest digital company, Intel, constantly lurching around looking for growth at all costs: in and out of consumer (twice), ASICs (twice), wireless ICs, flash memory and ARM processors.
God never said growth is good. He said growth is good at times e.g. Spring. It was
If God had a Harvard MBA he'd tell rose bushes that they had to bloom all year round, and that every year the roses must be bigger than last year's and smell better.
But God didn't. He said there's a time for growth and a time to retrench. A time to bloom and a time to re-generate.
That seems a much more sensible way to run a company based on a market as volatile as semiconductors, than to try and achieve quarter-on-quarter growth ad infinitum.
And that's why God's an analogue guy.
Great 'analogy', pun intended. That is simply 'old school', it worked just fine before the idiots got control of the works and now we're bleeding for it. ADI and LT proves the smart way to run a business, wake up the rest of you bums and learn success the right way!
Yeah, he probably is an 'analog guy'.
Thanks EGP, we need less bums and more IC-savvy CEOs.
Excellent article David
Thanks, Russell
Well Said!
Cheers, FK
But isn't God the almighty, who also possesses infinite wisdom? Why can God not tell rose bushes that they had to bloom all year round, and that every year the roses must be bigger than last year's and smell better? If not, may be he is just one of us? XD
One of us Outsider? I take it you're a Harvard man.
Suppose if God was to make a rose bush grow bigger year by year, it is okay if everything grows relative to that rose bush, i.e. the whole Earth or even the whole universe. That way we won't even notice. This is achievable if your powers are infinite. May be that is why the universe is ever expanding? To accommodate an ever growing rose bush.
My God, Outsider, you are definitely a Harvard man
Outsider seems to have forgotten the concept of wisdom. In his universe, there would only be roses. Just because something is achievable doesn't make it a good idea.
The idea is that there should be room for everyone and everything, and that nothing develops such dominance as to leave no room for anything else.
It may seem profitable in the short term to dominate, but the banking crisis should have told you there is a price to be paid eventually.
David, I think this article is one of the best you've written.
Thanks Peter, that's very kind. But, of course, Outsider could be right, and the universe may by now simply consist of one absolutely ginormous rose.
"...ginormous rose." - that's more Dr. Seuss than David Manners!
In saying that, Dr. Seuss and Harvard Business School do have something in common - heads in the clouds.
Excellent article, now how do we get the politicians and bankers to read it? Nay, learn from it!
Well Gary how do you describe a rose the size of the universe? 'Big' seems a trifle inadequate.
Just a small point but if you go to
http://www.analog.com/
the first thing you see is a banner headline saying "World leader in high performance signal processing". This sounds suspiciously DIGITAL to me.
A large chunk of ADI's sales comes from their Blackfin, SHARC, TigerSHARC and ADSP-21xx DIGITAL signal processors.
A recent product release is the ADuC706x family which has two 24 bit Delta-Sigma ADCs and an ARM7 core. Another decidedly DIGITAL product.
So it seems that large parts of the ADI product range went over to the dark side a long time ago. Maybe they should rename themselves Digital Devices.
OmiGod, Chris, Beelzebub reigns in Heaven.
David, I hate to rain on anyone's parade but Analog businesses have not been all that successful especially those established of late.
Lets think of a short list of disaster "analog centric" companies
Sigmatel
Zarlink
AKM
Sony semi
AMS
Exar..Sipex
Alcatel semi...AMIS
Plessey
Analogic Technology...?
System General...Fairchild
Crystal (Cirrus)
AMD(Slic/Slacs)..(Legerity)...Zzzz
ATT-Micro..Lucent..Agere..LSI..IFX
Rockwell semi..Conextant..Mindspeed..Jazz
Temic..Silconix...Vishay
AMCC
Vitese
TI's analog business growth, of recent, is mainly just in acquired PM products.
Maxim's margins have seen much better days.
RFMD (going going...)
Wow this list is almost endless...
It seems to me that the real shortage is in high quality CEO's who understand how to construct a long term business, which extracts superior margins for their products (digital, analog or SOC). Bob Swanson stands alone in this area, but I'm still glad I dumped my LT stock a few years ago...
David, I'm thinking about writing a semiconductor Investing blog. I don't really want to discuss (hype) individual companies but rather cover the fundamentals, what margin / growth is needed. Why product lifetimes are so short. How much wafers / test / IP / design / tools actually cost and how all these effect earnings. The reality of Patent valuation..
I've never seen such a blog, are you aware of anything similar?
Robert, that wasn't rain it was a monsoon. My parade's wiped out. You're right of course it takes a Swanson or a Gifford to do it really well. But National, TI, Intersil, ADI etc have prevailed over the decades through a succession of CEOs.
Robert, No. I've seen nothing like that. Loads of techie blogs, but nothing on investing. It would be an interesting area.