Xicor: Unmixed signals

With new fabless footing and a focus on programmable mixed-signal devices, company shows signs of resurgence.

By Marissa Glowac -- Movers and Shakers, 6/15/2001

	AT A GLANCE
	Xicor Milpitas, CA www.xicor.com 2000 revenue: $122.8 million 2000 net income: $9.3 million* Nasdaq symbol: XICO Share price: $4.42 (4/24/01) 2:09 pm 52-week high: $19.00 52-week low: $2.62 *Excluding restructuring

In 1996, Xicor was soaring high on sales of its memory products and employed roughly 750 people. Today, battered but not beaten, the company looks dramatically different.

Xicor recently announced the second phase of its transformation into a fabless semiconductor company with a differentiated product offering. Initiated in 1998, this proactive strategy came in response to a sharp decline in revenues and a loss in net income. It was then that Xicor formed a long-range plan to alter its dependence on commodity-oriented memory products and the high costs incurred with in-house chip fabrication.

Xicor has since changed its focus from manufacturing to new product development. In 1998, Yamaha Corp of Japan became Xicor’s initial foundry as the company kicked off the first phase of its new strategy, the outsourcing of wafer production and product testing. The company also introduced a new category of mixed-signal products that year.

For Xicor, 1999 was a year of transition with promising results. The company returned to operating profitability in the third quarter and total revenues for the year were up from 1998. The upward progress continued in 2000. In November, Lou DiNardo, a 20-year industry veteran, joined Xicor as president and CEO. That same month, Xicor completed its transition into a fabless company. And financially, the year ended on a positive note. Overall revenues grew to $122.8 million, up from $114.9 million in 1999. And, after three years of losses, net income (excluding restructuring activity) registered in the black at $9.3 million. The company’s mixed-signal business recorded revenues of $43 million, a 44 percent increase over 1999.

	“The company has a renewed sense of focus and commitment combined with a sense of urgency and excitement.” —Lou DiNardo, president and CEO, Xicor

In March 2001, the company announced phase two of its strategy, which entails aggressively focusing on programmable mixed-signal ICs and exiting the serial memory business. Xicor has decided to sell its serial E2PROM product line due to lackluster sales prospects and the high cost of supporting the business. With aims of becoming the leading provider of reprogrammble mixed-signal products in the communications, consumer, and industrial markets, Xicor is expanding its engineering, sales, and marketing initiatives relative to its programmable mixed-signal products, while also focusing on new product development and product designs to better serve its customers.

Although Xicor plans to exit the serial memory business, one thing it won’t leave behind is its years of experience in the nonvolatile memory market. Combining nonvolatile technology with its mixed-signal core competency allows Xicor to address issues of system tuning, trimming, and calibration.

In addition to being nonvolatile, all of Xicor’s products are in-system programmable. The lineup includes digitally controlled potentiometers (XDCPs), fiber-optic biasing ICs, battery-management ICs, and systems-management and time-keeping ICs.

Unfortunately, transition is not all wine and roses. Xicor recently made a difficult decision to decrease its work force by 125 employees in order to move forward with its goals. DiNardo notes that the company’s new strategy necessitates a different selling process, a smaller sales force, and more of a focus on engineering—hence, more field engineers. As a result, Xicor will be a smaller and more efficient company.

Xicor’s size is comparable to that of a hot new startup, yet it maintains the experience of a seasoned company. DiNardo says that he senses a shift in the company’s personality over the last four months. “The company has a renewed sense of focus and commitment combined with a sense of urgency and excitement,” he says. With this recent restructuring announcement, DiNardo expects the company’s transition to accelerate. He predicts that all sales will come from differentiated products by the end of 2001.

DiNardo also notes that Xicor’s value-added features give it the opportunity to grow faster than the mixed-signal market as a whole. With the future of mixed-signal products looking bright, Xicor is well positioned for the future. “This is a nice place to be,” DiNardo says.