Cypress reorganizes units to strengthen communications focus
By Mark LaPedus
Semiconductor Business News
(10/17/00, 06:39:56 AM EDT)
SAN JOSE -- In another move to expand its growing communications chip business, Cypress Semiconductor Corp. here has unveiled a strategy to better address some new and emerging segments in this exploding arena.
The move, which was officially announced on Monday, calls for the San Jose-based company to split its communications chip product development efforts into four major organizations: wide-area networking (WAN), storage-area networking (SAN), wireless infrastructure, and wireless terminals.
Each organization, which will have its own profit and loss responsibilities, will define and co-develop communications-oriented chips in conjunction with the company's existing four product divisions. Those include the Data Communications, Interface Products, Memory Products, and Timing Technology Divisions.
As part of the plan, Dan Morris, formerly vice president of Cypress' Data Communications Division, has been named vice president in charge of the new and separate WAN and SAN Segment Groups.
Steve Whelan, a long-time chip veteran, has been named vice president in charge of the separate Wireless Infrastructure and Wireless Terminals Segment Groups. Both Morris and Whelan report to T.J. Rodgers, president and chief executive of Cypress.
"Cypress already derives more than 70% of its revenues from key communications markets," Rodgers said. "The new segment organization will take our business to the next level, completing Cypress's transformation from a product-focused organization to a market-focused organization."
The move will also enable the company to bring out products to the market more rapidly, added Ralph Schmitt, vice president of sales and marketing for Cypress. Each organization will also work conjunction with major OEM customers to defined next-generation products, Schmitt said.
"The point of these groups is to develop forward-looking product strategies," he added in an interview with SBN. "The groups will also define how we merge our IP together."
The move represents the latest effort by Cypress to attack the communications chip market. Once known as a supplier of commodity SRAMs and other products, the company has been re-focusing its strategy in recent years.
In recent times, the company has sold a number of ICs designed for use in communications, including WAN chips, point-to-point local-area networking (LAN) ICs, low-power SRAMs for handsets, among others.
More recently, though, it has made a number of acquisitions to expand its efforts in the business. Last May, it acquired two companies, including Alation Systems Inc., a supplier of wireless LAN chips, and RadioCom Corp., a radio-frequency (RF) IC provider.
And last July, Cypress acquired Silicon Light Machines, a supplier of components for fiber-optic networks.
Separately, Cypress here today announced record revenue of $356.2 million for the third quarter ended Oct. 1, up 83% from the $194.9 million figure posted in the like period a year ago.
Net income, excluding acquisition-related costs and non-recurring items was a record $100.5 million, or $0.70 a share in diluted earnings. This compares to a net of $25.5 million, or $0.21 a share in diluted earnings, reported in the year ago period.
"Our growth is being driven by sales to our predominantly communications-oriented end-markets," Rodgers said. "Our performance in the third quarter marks our seventh consecutive quarter of sequential revenue and bookings growth at a pace nearly double that of the semiconductor industry. Cypress is now operating at an annual revenue rate over $1.4 billion," he said.
"Bookings were a record $428 million, generating our sixth consecutive book-to-bill ratio of 1.2 or greater," he said. "Our near-term revenue appears to be secure, given our six-month backlog of $551 million. We entered the fourth quarter with 89% of the quarter already booked." |
