NEW YORK – Mario Rivas has resigned as Anadigics’ CEO, both for professional and personal reasons.
In an interview with EE Times Tuesday, Rivas said, “It was a combination of things.” Rivas cited turmoil in the global market – including China and tsunami-shattered Japan. But in particular, he said that Anadigics has suffered from the softness of the market in China, noting that “companies of our size can get affected by inventory adjustments more than others.”
When Anadigics reported in mid-February its fourth quarter 2010 results (net sales of $60.2 million, a decrease of 1.7 percent sequentially, and an increase of 44.1 percent from the fourth quarter of 2009), Tom Shields, chief financial officer, in a statement, commented: "We are seeing indications of greater than normal seasonality in the first quarter of 2011 primarily due to softness in China and through our distribution channels relating to excess inventories, coupled with a continued market correction expected to further impact our cable and WiMax revenue.”
Clearly, the revenue shortfall anticipated by Anadigics for the first quarter of 2011 is a big red flag for the company’s board and investors. Anadigics expects revenue for the upcoming quarter to be in the range of $42-44 million, down from $60.3 million in the last quarter.
Without getting into details, Rivas acknowledged that his sudden resignation was a result of discussions with the company’s board, which he characterized as “very conservative.”
After the news hit the wire Monday, “Many people called me, asking me if I had disagreements with my board,” Rivas said. He then added: “Doesn’t everyone?”
But a little internal friction doesn’t explain a quarterly revenue decline of nearly $20 million. In an extensive discussion on the topic during the last earnings call, one analyst speculated that he expected a 12% “haircut” to Anadigics’ revenue “due to seasonality,” bringing what was $60.2 million revenue in the fourth quarter down to about $53 million. Anadigics, separately, noted that it is expecting its broadband business to decline by $6 million from fourth-quarter revenue. Adding this, the Q1 projection comes to $47 million. But there’s still a roughly $5 million gap between this number and Anadigic’s anticipated first quarter revenue.
The unknown factors include inventory correction in China and the question of how the current and emerging wireless business may affect Anadigics’s revenue in the Q1, and more important, Q2.
On one hand, Rivas asked for “some patience” from its investors as Anadigics “rebounds from the first quarter softness in cable products” and “drives the company’s products, both new and existing products, very hard.”
Anadigics’ new product family includes power amplifier duplexers (pads). Rivas noted that pad’s smaller footprint and lower cost offers “the potential to generate meaningful growth for us as it effectively doubles our available market, while supporting key requirements of some of our most important customers.”
Rivas said, during the earnings call, “I remain optimistic about our subsequent quarters and our future growth in 2011. This includes cable and especially the 3G and 4G markets.” He also pledged, “I am willing to use at least part of the cash that we have generated to maintain our R&D pace because we are in a very good momentum. Customers like what we’re doing and the opportunities require that we invest.”
On the other hand, the company’s board, at a time when the company still doesn’t know how fast excess inventories may burn off in Q1 and Q2, apparently did not seem to have the stomach to take Rivas’ word at face value and approve continued investment in new products.
During an interview with EE Times, Rivas described his experience working at Anadigics as “very different from what I grew up in.” Rivas previously worked for much bigger companies like Motorola (now Freescale), Philips Semiconductor (now NXP) and AMD. The board and investors for a smaller company like Anadigics tend to be more conservative and risk-averse.
Speaking of his own management style, “I’ve never broken a rule… but I’ve been always on the edge,” said Rivas. But while at Anadigics, he said, “I have been straddling the middle.”
Over the last two years, since he took the helm at Anadigics in February, 2009, Rivas said that he brought “order” back to the company’s manufacturing plant, and the company achieved operational excellence. In fact, Anadigics truly had a great 2010. Anadigics revenue for the full year 2010 grew 54.3 percent over 2009 to $216.7 million.
But with quarterly financial results continuing to rule corporate America, the company’s good annual performance in 2010 wasn’t enough for the Anadigic’s board to keep the current CEO around.
In speaking with EE Times, Rivas never went into details of his disagreements with the board. Instead, he emphasized: “Anadigics has a nice cash flow, good foundation and good pipeline of products. They will do fine.”
Rivas is “not in a rush” to look for another job. For the time being, he plans to go back to El Salvador (his home country) to care for his ailing mother. And he added that he would eventually go back to Austin, Texas, where he maintains a home.