Although CP Clare Corp. continues to post losses after a years-long restructuring, the company's chief executive remains quite optimistic.
Under a new name, Clare Inc., and revamped organization that now has the company's units focused on end-product applications, president and chief executive Arthur R. Buckland said the necessary changes have set the stage for profitability in the next 12 months.
"It's unfortunate that a lot of this has happened at the time the semiconductor industry is exploding, and of course the equity markets are never happy about losing money," he said. "I think the new name, new products, and new direction we're looking at for the next fiscal year will net a profit. We've invested heavily, and it has been tough on all of us going through this period of losing money, but we see substantial opportunities ahead."
Buckland saw opportunities in the semiconductor industry a couple of years ago, when he decided to enter CP Clare into the high-voltage-analog business. In July 1998, The company acquired analog and mixed-signal ASIC vendor Micronix Integrated Systems Inc. for $15.8 million.
A year later, CP Clare sold off its electromagnetic operation in Guadalajara, Mexico, to Sumida Electric Co. Ltd. for $36 million in cash in order to sharpen its semiconductor focus, Buckland said. The company's roots lie in electromechanical components such as relays and switches, not in silicon.
But divestitures, false starts, and slow ramp-ups of new chip products have resulted in losses for the Beverly, Mass., company. During the first nine months of its 2000 fiscal year, CP Clare reported a loss of $5.4 million, excluding a gain from the August 1999 sale of its electromagnetic operations, on revenue of $64.3 million.
The company completed its fiscal year today, and results for the fourth quarter will not be released until late April.Total revenue for the year will be around $85 million, and CP Clare will likely post a loss for the fourth quarter and year, Buckland said.
Losses are also possible for the first two quarters of fiscal 2001, after which the company hopes to begin reaping the benefits from the reorganization.
"Historically, we've never been in the PC [market] itself, and the nice thing that has taken place in the last one or two years is the move in the industry from being PC-centric to connections and communications and the Internet, which fits perfectly with our new strategy," Buckland said.
To complete the reorganization, CP Clare, whose name will officially change to Clare in September, has created six product-based business units: ASICs, central-office products, customer-premise equipment, OLED-display drivers, solid-state relays, and switches.
Each of the new units represents at least a $200 million business opportunity annually for Clare; revenue from OLED-display drivers, for instance, could quickly ramp to as high as $500 million, Buckland said. CP Clare is working on its second-generation color organic light-emitting-diode (OLED) display drivers. The company has no competition in the market, he said.
"This is a huge volume type of business," Buckland said. "For a couple of years, we've been dealing with companies like Philips, Sony, and Samsung. These applications are just beginning, and no one else even had a first-generation product available."
Buckland also added that he believes the company can exceed $100 million in revenue in fiscal year 2001, and will quickly ramp beyond $500 million in annual revenue.
"It certainly isn't five years away," he said. "We're sitting at the bottom of the curve looking at some compelling opportunities critical to communications applications."