San Francisco - Chairman, president, and CEO Alex Lidow was decidedly thrilled with the performance of his company in the latest quarter. Though down 4 percent from the previous quarter, International Rectifier Corp.'s December quarter revenues, $298.6 million, were actually up 18 percent from the $252.3 million reported for the same quarter last year.
What's more, net earnings for the December quarter were $44.8 million, up from the $24.6 million reported for last year's December quarter, and up from the $42.4 million for this year's the September quarter.
Clearly IR's financial results, particularly the revenue drop from September, suggests that the company is effected by the same slowdowns impacting other semiconductor manufacturers - but no where nearly as severely.
Lidow attributed the buoyancy to his company's investment in largely propriety products - power management ICs and MOSFET transistors that nobody else makes. Roughly 69 percent of IR's sales are in proprietary products, Lidow insisted.
Lidow was especially enthused about the sales of energy-savings power trains into "white goods" suppliers like Whirlpool, Electrolux, Haier, Sanyo, Toshiba Carrier, Miele, Dyson and Frigidaire. He believes IR's "iMotion" power train architecture enjoys among appliance makers the same position that Intel enjoys among PC motherboard makers.
Lidow did acknowledge regional differences in the implementations of the power train: Asians (particularly, the Japanese) are partial to energy-efficient air conditioners. Europeans apply the power train to washing machines and driers, while the Chinese apply energy efficiency to their new-generation refrigerators. Americans lag the rest of the world in the application of energy-saving electronics to appliances, Lidow said.
As previously noted, IR continues to secure design wins on Pentium-based motherboards and server cards. The XPhase (mulit-phase) controllers DirectFET miniature switches won leading positions at five of the top PC and server companies, and two of the top communications networking companies, according to the press release issued Thursday (January 27th).
The reported design wins, up 33 percent from the same quarter last year, include six new notebook designs for Intel's latest Dothan platform, three desktop designs with Intel's Grantsdale platform, and 15 high-end server designs in platforms using Intel's Nocona processor and Lindenhurst chipset. There are an additional six designs in other processor platforms, and three design wins for the next-generation Itanium machine.
Pay no attention to goofy people
Class D audio appears a thriving new business for IR, despite audiophile worries about sound quality. "There are some 'goofy people' who will never be pleased no matter what you do," Lidow acknowledged. The company's analog ICs support Class D amplifiers in JVC and Yamaha audio systems, and in Samsung, LG, FHP and NEC plasma and LCD flat panel televisions. "It's going to be a great market," he said.
In automotive realms, IR expects a production ramp in 2005 vehicles like the GM Silverado/Sierra hybrid truck, the Ford Mustang, the Chrysler 300, and the Dodge Magnum. Designs wins, not yet in production, include electric steering, direct injection, engine preheat, engine management, and electric fan control systems for DaimlerChrysler, Ford, VW and BMW.
Though increased design wins should spell an exuberant 2005, IR will be effected by the same inventory issues impacting other manufacturers in its "commodity" (multi-sourced) products. It will take another quarter for all inventory issues to be resolved, Lidow opined. Thus, revenues for the coming March quarter are expected to be flat, or down by as much as 6 percent. Gross margins will likely maintain themselves at their current level, and the outlook for 2005 will hopefully improve after that.