BOSTON Jerald Fishman is pumped.
While skeptics argue that the Analog Devices Inc. president and CEO faces big challenges in talking up his company's value to investors in a tough market, Fishman remains undaunted. Analog Devices, he insisted during an annual Analysts' Day Thursday (March 11) offers big opportunities for investors looking to add high-performance, proprietary analog semiconductor technology to their portfolios.
|ADI CEO Jerald Fishman|
Analog Devices (Norwood, Mass.) deserves a higher valuation on the equity market, Fishman said, and investors need only to scratch the surface to unearth value in a business he said has changed dramatically over the past three years.
"We want to get higher returns for our shareholders," Fishman said. "In order words, we want to capitalize on our investments because we are not done yet. ADI has realistic opportunities to grow, we have a model for growth and we have a credible team that is committed to executing our vision."
This wouldn't be a hard sell except that Analog Devices plays in a sector plagued by investor doubts over consistent and sustainable growth, fluctuating unit demand, extreme pricing volatility created by the number of companies in the market. Furthermore, analog vendors have often been viewed by investors as the less attractive, junior players in an industry characterized by overwhelming investor focus on the faster growing digital IC segment. That segment is dominated by companies like Broadcom Corp., a darling of fund investors. Broadcom's stock price jumped to a new 12-month high this week.
"Our clients often don't see analog stocks as key components of their holdings," said an analyst attending ADI event. "They cannot as easily predict the performance and returns of the analog companies because there is so much variation in sales from one year to another, and it's difficult making long-term investment planning because of this."
Adopting a strategy that is unusual among corporate CEOs, the 63-year-old engineer and CEO is directly courting investors. Recent moves to reduce manufacturing costs along with focusing on higher-margin product segments have turned Analog Devices around, placing the company on a growth trajectory that should push it above market expectations, Fishman said.