Here is the full text?:
ALEXANDRE BALKANSKI - C-CUBE MICROSYSTEMS INC (CUBE)
CEO Interview - published 11/04/1999
CEO INTERVIEW: ALEXANDRE BALKANSKI, C-CUBE MICROSYSTEMS INC (CUBE)
THE WALL STREET TRANSCRIPT CORPORATION (HAU208)
ALEXANDRE BALKANSKI, President, CEO, and founder of C-Cube Microsystems,
has been with the company since inception in 1988, and its President and
Chief Executive Officer since July, 1995. He had previously served as
the company's Executive Vice President and Chief Operating Officer.
Prior to joining C-Cube, Dr. Balkanski had co-founded and served as
President of Diamond Devices, a semiconductor company specializing in
Digital Signal Processing (DSP). He is a member of the Board of
Directors of C-Cube Microsystems, and serves as an outside Director on
the board of PMC-Sierra, Inc. Dr. Balkanski was graduated from Harvard
College with a B.A. in Physics. He went on to earn his M.S. in Physics
and a Ph.D. in business economics from Harvard University.
SECTOR: SEMICONDUCTORS
TWST: Could you begin by giving a brief overview of C-Cube?
Dr. Balkanski: We were established a little over 10 years ago as the
transition from analog to digital video was just getting started. We
began as an innovative semiconductor company that developed many of the
original technologies for putting video into digital formats. In 1996,
we acquired an outstanding systems company, DiviCom, which is a digital
video networking play. Today, DiviCom deploys video network
infrastructure systems for companies such as DirecTV for satellite,
Cablevision for cable, and BellSouth for Microwave cable. DiviCom
enables the video networks to be deployed, while the semiconductor side
of the company develops the key element of video compression and
decompression that allow for digital video to be transmitted and stored
in consumer and communication applications. On the semiconductor side,
the key business is in interactive set-top boxes, digital video disks
(DVDs), and the future recordable DVD platform. The company should bring
in approximately $400 million in revenue this year, which represents
very rapid growth over the past few years. DiviCom, is currently growing
the fastest of our two organizations, with over 30% gain each year, and
the semiconductor division is experiencing an acceleration of growth
based on million-plus units of DVD shipped in single quarters, set top
boxes and Codecs.
TWST: What are the most significant trends, developments, changes and so
forth you anticipate in your markets over the next several years?
Dr. Balkanski: The most significant development on the consumer side is
the advent of recordable digital video platforms. We are now involved in
powering consumer electronics devices that can record and playback
digital video in the home. Over the next several years, recordable
platforms for the digital video disk represent the most significant
development on the semiconductor side. Another very significant
development on the communication side is the interactive set-top box.
Multiple services such as data, voice and video on one platform into the
home impact both our DiviCom system activity as well as our
semiconductor activity. We see these as big powerful trends.
TWST: What are the greatest opportunities for C-Cube over the next
several years? Is there a chain of events that could lead the company to
substantially exceed expectations?
Dr. Balkanski: I think that the greatest opportunities are to play out
these big trends that I have outlined: recordable platforms, interactive
set-top boxes and the convergence of multiple services. We have
pioneered the encoding technology, enabled an entire industry; and now
we have an enormous opportunity in transferring this enabling technology
into mainstream consumer electronics. Similarly, we have pioneered and
enabled the deployment of digital video networks and the interactive
set-top, establishing a dominant position by delivering a complete
communication solution between DiviCom and the Semiconductor division.
Those are the big opportunities that we have to exceed expectations and
solidify our already strong position.
TWST: What are the major concerns or risks that the company faces now
and in the future?
Dr. Balkanski: I think that the major issues are to remain focused on
our core competencies, to run with the markets as they develop and to
establish 'first mover' advantage, which we have done historically.
There is nothing like being first in a market just as it takes off.
TWST: What else sets the company apart from your competition?
Dr. Balkanski: I think what sets us apart first is our heritage in
digital video. We literally pioneered this field. We have secured a
first mover advantage at each generation, and have been able to evolve
with the technological and marketplace changes. Also, as I noted
earlier, we are a complete communication play. Much the same way that
the cellular telephony players, Nokia and Ericsson, have an
infrastructure division and a hand-held division, we have DiviCom to
deploy the digital video communication infrastructure, and then we have
a powerful semiconductor play. That's end-to-end completeness and that's
what sets us apart.
TWST: How do you think your R&D expenditures will change in the future?
Dr. Balkanski: We want to increase R&D expenditure as much as possible.
We have been spending for R&D at the level of about 18 to 20% of our
revenue, which is quite aggressive when compared to our competitors. Our
hope is to use accelerating revenue growth to increase the absolute
dollars while maintaining our high percentage in R&D, and creating even
more advanced technology. This, we feel, will keep us ahead of the
competition.
TWST: Any weaknesses in the company that need to be addressed or put
differently, any challenges to be me?
Dr. Balkanski: The key challenge is to face up to our big and powerful
competition. In order to do this, we need to be sure that in the markets
that we engage, we have critical mass and the ability to win in markets
where we choose to engage customers. Winning to us, which translates to
a 30% percent steady state market share position. The way to do this is
through a combination of organic growth and acquisitions.
TWST: What are your specific goals for C-Cube over the next few years?
Dr. Balkanski: Our specific goals are to perform as strongly as possible
for shareholders, to navigate ahead of the very rapidly developing
digital video markets and to grow faster than our competitors.
TWST: How do you feel about the valuation that the market is currently
placing on your stock?
Dr. Balkanski: The value of our stock is the currency we must use to
retain our strong employee talent and to make acquisitions. Therefore,
it is critical to our success that we continue to grow that valuation.
It's a means to an end, and the end is to play a powerful role in this
market.
TWST: If we were sitting down now with a group of potential long-term
investors, what reason would you give them to invest in C-Cube
Microsystems?
Dr. Balkanski: I would illustrate for them the rapid and accelerating
pace of growth in our markets coupled with our unique position. We are
dominant in all of our key markets: systems for communication
deployment, set-top boxes, DVDs and encoding. Maintaining and growing
this dominant position is what will insure strong financial performance
for the company, now and into the future.
TWST: Thank you.
ALEXANDRE BALKANSKI, PH.D.
President & CEO
C-Cube Microsystems, Inc.
1778 McCarthy Boulevard
Milpitas, CA 95035
(408) 490-8615
(408) 490-8384
(408) 490-8615-FAX
Each Executive who is the featured subject of a TWST Interview is
offered the opportunity to include an Investors Brief or other highlight
material to be provided and sponsored by and for the company.
Copyright 1999 The Wall Street Transcript Corporation
All Rights Reserved
The Wall Street Transcript (TWST) interviews are published verbatim, and TWST does not in any way endorse or guarantee the accuracy of any information or opinions expressed herein and all opinions are subject to change without notice. Nothing herein constitutes a solicitation to buy or sell any securities. TWST interviews with CEOs may include include "forward-looking statements", which are based on factors that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. TWST shall have no liability whatsoever for any trading losses arising out of use of this information. Copyright 1999 Wall Street Transcript Corporation. All Rights Reserved. |
