Here's what I think:
Any significant shareholders who are left will continue to hold and maybe add more as the worst is over, things are on the mend. Most of recent run up was probably due to deep pocketed buyers seeking a new long term position not short term momentum chasers. The few mo chasers who climbed onboard last week have probably already bailed due to recent price ramp flattening. Market in general has shifted away from high cap tech (check out Intel and MU) to low cap tech like XICO and ALSC. Individual large buyers such as yourself have been accumulating.
For its part Xicor has done a comprehensive job shaking things up over the past year, across the face of the company.
They brought out a significant new packaging technology (XBGA). They are pushing through a competitive process technology to full customer acceptance (C7). They have announced a strategy shift remaking the company with an engineering orientation focused on mixed signal design development combined with their e2prom expertise turning it away from being predominantly manufacturing in orientation.
They have instigated plans to shift almost all manufacturing to more cost effective contracted support from fab to ship, this shift will yield significant additional benefits beyond lower costs including developing business alliances with companies whose other expertise such as design can be and has already been leveraged. It also removed from the company the liability of facing any future fab technology upgrades on their own. In the future this will be borne by the deeper pockets of Sanyo and or the other fabs. Fab partners are now able to expand capacity available to Xicor much more easily. Xicor has committed itself to a productional shutdown of the Milpitas fab within the next year and half, which means an "impairment" charge that will ultimately result in improved quarterly numbers in the near future. In one of the next three reports they should take the hit depending on when in 2000 the Milpitas fab will be shutdown.
They have enhanced engineering design expertise, hiring Jim McCreary, former engineering VP and founder at Micro Linear and he has been making changes in procedures and heads including new hires in Engineering. They have been leveraging design expertise at their fab partners who have been contributing significantly to the new battery management effort. They have reorganized their product portfolio hiring new Product Line Management for some of their product lines. They developed a continuing business relationship for smartcard tech with ATMI, bringing in $4 million dollars from that agreement alone. They have enhanced their System Management product line significantly and increased their DCP product line as well. They have also brought out new versions of some memory products. They have started making progress on their family of Smart Analog products too after a false start on Smart Op Amps, they are committed to re-release these for sampling later this summer. Last winter in a couple of notices posted on their web site, they announced that a significant group of older products would be discontinued (LifeTimeBuy issue) and that final orders would only be accepted through end of Q1/1999 for delivery through end of Q4/1999.
They have revamped sales force across the board. They shifted the Asian Sales office from Newport Beach, Ca to Shinjuku Prefect near Tokyo. They moved the Northern Calif sales office and changed heads there too. They added several new Sales VPs including Lewis as head of Worldwide Sales. Lewis formerly came from IDT. They have added a major accounts focus and they have added a focus on distributor sales as well as the reorganized focus in Japan with a Xicor Japan KK subsidiary, hiring President Osada and hiring others. They have more recently added new requisitions for several Field Application Engineers across the US and they are trying to beef up Asian sales with open positions in HK and Japan and locally they are seeking to hire a new VP of North American Sales.
They reinforced marketing adding Levis over a year ago, and later a new Marketing Communications Director, Mathews. They shifted Drori into the Marketing arena now responsible for New Product Definition. A tangible outcome was the presentation of recent developments in battery management area. They've replaced the tired old logo with an exciting new one (though it means "danger lookout!" in colloquial Chinese) I interpret this to mean Lookout! This is not the tired old Xicor of yesteryear!
Significant changes to the Board adding Gray and Winkler, retiring Dill and Allen Kline plus a vote to expand the Board seats. The vote was continued to this Friday, turn your votes in, if you are pro this item! Its important to the future of this company for this to pass. Officers and Directors have increased total ownership from 4.9% to 6.4% in last two reported years and they have continued to buy sporadically this year as well.
Throughout all this past year the stock has languished in the depths, while burned out shareholders have given up and sold out near the bottom. A bottom has been made and the stock has turned in concert with the tech market which is in turn responding to positive developments worldwide after a lengthy two year recession.
Having adjusted to bargain basement pricing levels for this stock we bystanders are staring in disbelief as it has started reemerging from its near death pricing. The events of the past year are foundational and presage recovery of the company's financial health. Future growth is at best a guess but even at $60 million market cap this is a discounted stock for a company in the semiconductor arena generating in excess of $100 million revenues. This is a great turnaround story and should it continue to improve, its an easy guess that the stock price will too. |
