Trotting round
Others are simply ignoring the demands of the financial community, having wised up to the fact that these people do not understand other peoples' businesses as well as they pretend to do.
For instance Wall Street analysts pressured
Now, with the market turning up, TI and National are among those with the longest product lead-times in the industry.
According to Arrow's lead-time guidance, lead times for National's Data Converters, Op Amps, Interface ICs (UARTs, LVDS, USB) and Power Management are up to 26 weeks.
Arrow says TI's lead-times for Interface ICs is up to 22 weeks, while the lead time for TI's Power Management products is up to 30 weeks.
Apparently 6,500 TI parts are on distributors' lead times of 18 weeks or more.
By contrast, Linear Technology Corporation (LTC) resisted the urgings of the Wall Street analysts and tried to keep its employees in place. Now, LTC has the shortest lead-times in the analogue IC industry - at two to four weeks.
If you close an IC production line it takes ages to re-start it. So you trot off to a foundry to get your chips made and, lo and behold, all your competitors are knocking on the door trying to get wafers as well as you. And the wafers are on allocation.
So you offer more money to get priority on the allocation, and bang goes your margin.
As soon as everyone realizes that Wall Street-ers don't have all the answers, don't have superior industrial expertise and can severely damage people's businesses, the better.
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Comments (8)
Unfortunately some company executives are as in love with their stock options as bankers are with their bonuses and until stock options rewards are properly tied in with true long term performance (say 5 to 10 years) of the company then "management by short termism" will continue.
Whether this is the case at the companies mentioned I'll leave to others more qualified to judge.
Posted by Mike Bryant | October 26, 2009 12:11 PM
Posted on October 26, 2009 12:11
You're right, Mike, such long lead times, so soon into the industry up-cycle, suggests that those who cut savagely will be in a hell of a mess.
Posted by David Manners
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October 26, 2009 12:18 PM
Posted on October 26, 2009 12:18
And of course the recent events at IBM and Intel Capital show some haven't given up on get rich quick illegally/immorally schemes !
Once upon a time there were two people with the highest ethics who every person in the electronics industry looked up to. It's probably just as well Bill and Dave are no longer with us as what they would make of things now I hate to think.
Posted by Mike Bryant | October 27, 2009 8:10 PM
Posted on October 27, 2009 20:10
Amen to this and not before time. I have long advocated giving these folks the finger and just getting on with doing the job right. They are at best bullies and at worst just in it for their own short-term gains. Any CEO dancing to Wall Street's Tune is on a lost corporate cause. How refreshing to hear Pasquale's views on this in Geneve ... it's the CEOs job to tell Wall Street what they are doing and why, not the other way around! Sock it to em baby. Hit em where it hurts!!!
Posted by Malcolm Penn | October 28, 2009 7:44 AM
Posted on October 28, 2009 07:44
You're right, Mike, they're an absolute shower from the private equity lot to the banksters - they will suck the life out of industry, if they're allowed to, because they chivvy CEOs (largely remunerated by options based on share price) into doing horrible short term measures like sacking people, chasing commoditising markets and cutting R&D costs which destroy the long-term future of companies.
Posted by David Manners
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October 28, 2009 11:06 AM
Posted on October 28, 2009 11:06
Malcolm, absolutely. There seems to be a disconnect between Wall St and the semi industry. Wall St complains the semi industry has low growth so they punish semi shares. The semi people say Wall St wants cost cuts and growth but cost cuts affect your future competitiveness and profitless growth ultimately destroys any company. Good old Pasquale could stick it to the analysts in such a charming way they didn't seem to mind. I think there must be something in the Wall St model for industry which doesn't fit with the long-term strategies needed to succeed in the semi industry.
Posted by David Manners
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October 28, 2009 11:16 AM
Posted on October 28, 2009 11:16
What a great clear article, well done. I am sure Wall Street knows what it is doing in many industries but Semiconductors is one of the most extreme ones to NOT take a short term view with the actions.
Posted by Martin Wallman | October 28, 2009 2:39 PM
Posted on October 28, 2009 14:39
Well thank you Martin Wallman, that's much appreciated.
Posted by David Manners
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October 28, 2009 3:08 PM
Posted on October 28, 2009 15:08