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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: OldAIMGuy who wrote (10233)	4/26/1999 10:00:00 PM
From: SemiBull	Read Replies (2) \| Respond to of 11555

Will Chipmaker Remain In Black For Good Now? Date: 4/27/99 Author: James DeTar Integrated Device Technology Inc. has been swimming in red ink for most of the past year. But Chief Executive Len Perham says now that the company finally has struggled back to its feet, it will remain profitable. For the fourth quarter ended March 28, Integrated Device reported net income of $8 million, or 10 cents a share, a 400% jump from the $1.4 million, or 2 cents, reported in the year-ago period. That follows three consecutive losing quarters in which the company fell into the red by a cumulative $45 million. Integrated Device is looking for ways to shore up its finances. In this interview with Investor's Business Daily conducted recently, Perham reveals he's looking for a partner for the company's Centaur Technology subsidiary. Centaur rolled out the WinChip, a low-cost Intel Pentium competitor, in May 1997. But Advanced Micro Devices Inc. and National Semiconductor Corp.'s Cyrix subsidiary quickly moved into the market for cheap PCs. In addition, start-ups like Rise Technology Co. made competition tougher. Now Perham doesn't rule out the possibility Integrated Device could sell its Centaur unit. IBD: What are your plans for the WinChip microprocessor? Perham: We made the decision probably six months ago that since the business is so aggressive - and the players are so huge - we need to find partners going forward. So we've been very active in looking at partners that could share in product definition. They may have ideas that we don't have because we don't have the world's best visibility to customers. Or we may partner with a company that might be able to provide product architecture, design and definition help. IBD: But if you don't find a partner, are you willing to sell the Centaur unit? Perham: The only thing that we've come to grips with is that we're too small to slug it out with these players alone. We need a partner. We've had several people approach us and we've approached a fair number of people. And we're in various stages of conversation. But it's our intention to have a partner going forward in that business so we don't bear the full brunt of it alone. IBD: What is Integrated Device's main focus today? Perham: If we look at the company today, there are four areas that we've got everybody in the company focused on. The first one is cost control. The second thing we need to do - because the company has a great deal of excess (manufacturing) capacity - is we need to increase sales in every way we can. The third key item is continued intensity on the introduction of new products. In the last 18 months, many of the products that we were starting to configure as early as the middle of 1995 have now come to pass. The fourth point of strong focus was to move our research and development to Oregon. All of this is aimed at moving us in the direction of communications and creating innovative new products that allow us to be able to enjoy relationships with customers that we didn't have enough breadth to do business with in the past. IBD: Why did you refocus the company on the communications chip market? Perham: The communications revolution is just starting. And I think it's headquartered in the (Silicon) Valley. If you look at the big players, the majority are right in this valley. If the semiconductor industry should grow by 7% to 9% this year, certainly the communications business is going to grow more. It's driven by innovations that improve quality of service. It's driven by innovations that will result in a lot more data bandwidth capability. It's driven by the sheer growth that's going on in the current market. And it's driven by totally new markets trying to open up, such as mainland China. IBD: What are your plans for Integrated Device's future growth? Perham: We own 87% of this small start-up, (Santa Clara, Calif.-based) Clear Logic Inc. Clear Logic is in the business of making a number of (reprogrammable chips). . . . This again is an opportunity to avail ourselves of more of our customers' market. They're beginning to do something. We should hear more about that later this year. We have a chance to see that business break even, maybe by the fourth calendar quarter of this year.