Frank, I have been a Cirrus shareholder for about two years but followed them before that for a while. I agree that management still needs to do a lot of work if this company is going to take off like it has the potential of doing and as we as investors would like it to do. I expect them to be working on things like product strategies, customer relations, design methodologies, and attracting good employees. If they aren't continually improving those things that spells trouble. But those are also not the kind of things we as the investing public are going to see much indication of until several quarters' results come out. The majority of this thread seems to be ranting and raving that management is not taking any public action to shore up the stock price right now. I would rather that they do a good job behind the scenes doing the things I mentioned in order to insure good results for the next few years. Regarding their relationship with Wall Street, I think they were burned by the lawsuit a couple years ago that cost them $30 million. You are a lot slower to go out and brag about the company's future in order to raise the stock price if doing it has already gotten you sued once.
As far as my opinion on layoffs goes, I am as big a proponent of capitalism as anyone else. I think a company should have the right to layoff anyone they want and that in the long run it often benefits the economy because those workers find more productive jobs. Perhaps I am a little emotional about the subject right now because I have just experienced a layoff in the last couple weeks. I survived but a lot of my friends did not. My complaint with some layoffs is that it seems that companies are too shortsighted. It seems that this happens most often in the semiconductor industry where the business cycle is short and extreme. Often six months after a layoff a company is trying to replace all the people it just let go. This is a company's perogative, but it doesn't make much business sense to have wasted all the money on severance pay and then have to train a new employee for the same job. I think the best policy would be to have layoffs when the industry makes a permanent (multi-year) change. For example, the defense industry obviously needed to have layoffs in the 90s; those talented employees needed to be shifted to a part of the economy where their skills could be utilized again, even if the process was painful. Another necessary time for layoffs is when your competitive position has changed substantially and is not likely to recover soon. A sinking ship needs to give up some of the valuable resources it is tying up. That is a beautiful if sometimes harsh part of capitalism. Maybe that has been the case with Cirrus, that as they have lost out to the competition, they have needed to cut workers.
I agree with your concern that "Earnings have improved but that was purely done by cost control (ie layoff)." Do you also remember the charge that Cirrus took in March 1997 for overcapacity throughout the year at the MiCRUS fab? How much of an artificial boost did that give to the earnings the rest of the year? However, one big reason for revenues declining is that Cirrus has divested a lot of businesses in the last year or two (Flash storage, Pico Power, PCSI, Nuera). How would they look with that factored in? I don't have the numbers in front of me, but I suspect that revenues would be closer to flat or slightly up if present business is considered. |
