Microsemi diversifies as DoD budget cuts loom

Offsetting cuts

Analysts said DoD cuts will be offset by Microsemi’s other major businesses: communications, which accounts for 31 percent of revenue; aerospace (21 percent) and industrial (20 percent).
Its three largest applications in the communications sector include power-over-Ethernet, RF, timing and synchronization. Tier one customers including Juniper Networks, Cisco, Huawei, Sony, Fujitsu, Alcatel-Lucent and Samsung.

Microsemi’s diversification drive also includes acquisition’s. Tore Svanberg, an analyst with Stifel Nicolaus, said Microsemi’s acquisitions of Zarlink Semiconductor and Maxim’s timing/synchronous business “has significantly improved and expanded its overall product portfolio and reach in the wireless segment, particularly as it relates to wireless infrastructure and exposure to core routers/switches….”

While Microsemi is planning acquisitions similar to its $430 million Actel deal in 2010, it continues to looks for deals while investing in organic growth, Litchfield said.
Earlier this month, Microsemi appointed James Mazzo to its board. Mazzo serves as senior vice president at Abbott Medical Optics, a leader in advanced refractive technologies for eye care.

Meanwhile, the company remains tightly focused on growing dollar content per application since it is no longer discrete parts supplier. This systems strategy could help Microsemi reach its projected growth rate of between 10 percent and 12 percent annually.

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