[offtopic] <A> Rockwell Unit Sees Niche Between Analog, Digital Worlds
By Anthony Palazzo
PASADENA, Calif. (Dow Jones)--Rockwell Semiconductor Systems intends to leverage its expertise in converting analog signals to digital ones, and then back again, in order to thrive over the next decade as the digital revolution transforms telephones, consumer electronics and photographic imaging.
"We will be recognized in the world as the semiconductor company that enables personal communications," said Dwight Decker, president of the Rockwell International Corp. (ROK) unit. Rockwell's heritage in such fields as fax and modem technology "is right in the center of all these markets," Decker said.
At a press event Tuesday at the unit's Newport Beach, Calif., headquarters, Decker and his top managers outlined strategy and revenue goals for the next five years. He said the semiconductor unit will strive to increase revenue to $3.1 billion in fiscal 2002 from a projected $1.6 billion in fiscal 1998.
The projections rely on growth in emerging product areas that make use of digital technologies for communications. Markets for Rockwell's current mainstay, stand-alone modems and fax machines, are expected to slow.
Rockwell Semiconductor's revenue declined to $1.58 billion for the year ended Sept. 30, 1997 from $1.59 billion in fiscal 1996. The company blames a dispute with 3Com Corp.'s (COMS) U.S. Robotics Corp. over standards for 56-kilobit modems, which kept consumers away from both companies' products.
The issue was settled last week, and Rockwell has begun shipping chip sets for the international V.90 56-kilobit standard. U.S. Robotics said it will ship its modems by the end of March.
The single standard "hopefully will release pent-up demand in the market, hopefully a return to normalcy in 1998," said Moiz Beguwala, general manager of Rockwell Semiconductor's personal computing division.
But, it was emerging products that figured in Rockwell's presentation. In Rockwell's view, new products with modems inside will overtake stand-alone modems. Fax machines will receive and print images of photographic quality that were taken on digital cameras.
These technologies exist today, but for the most part haven't yet been turned into products for the mass consumer. As technology improves, standards are agreed upon and product categories converge, Rockwell sees its ability to build the underlying communications system as a huge advantage.
Rockwell Semiconductor will seek to build leadership and brand-name identity as these new markets emerge over the next five to 10 years, President Decker said. "Our technology is the key technology to address those marketplaces," he said. "We should deliver some nice financial results over this time period."
The foundation for Rockwell's strategy was laid out in 1995, Decker said. He said Rockwell will embrace all communications technologies, seeking to drive bandwidth in a way that mirrors Intel Corp.'s (INTC) promotion of computers that demand ever more processing power.
The use of digital technologies to store and send information already has transformed some industries. Music publishing, where CD-ROMs replaced vinyl records more than a decade ago, is the best example, and current trends toward digital photography, digital wireless telephones and overlapping television/PC functionality are indications of an increasing pace of change.
Despite digital communications' ascent, analog transmission isn't going away either, Decker said. Human beings, for one, see and hear through analog means. The current telephone system is analog, and while the newest cellular phones are digital, the radio waves on which signals travel are analog.
Rockwell, with its experience, strong research capability and customer relationships, is uniquely positioned to capitalize on the increasing reliance on digital-analog translation - called mixed-signal processing -that new products will need, Decker said.
Rockwell Semiconductor's fastest-growing business segment has been wireless communications. The company projects revenue will reach $650 million in 2002 from $200 million projected for fiscal 1998 and actual revenue of $116 million in fiscal 1997, Vijay Parikh, general manager of the wireless division, said.
Rockwell has seen a "relatively small" impact from problems, including financial dislocations in Asia, that caused its customer, Qualcomm Corp. (QCOM), to issue a profit warning last week. This impact has been offset by other wireless lines of business, he said.
Parikh also suggested that Rockwell is in part responsible for the difficulties a competitor, Anadigics Inc. (ANAD), is having selling its wireless telephone components. "Someone is out there taking all of these markets," he said.
On Jan. 29, Anadigics cited numerous factors, including increased competition, for its below-view fourth quarter earnings. Anadigics officials did not return a call on Wednesday seeking comment. |
