From the editor - December 1, 1998
In the article, "Cypress vs. IDT" (June 1998, p.44), there were a number of references that could benefit from clarification.
The story reported that T.J. Rodgers, president and CEO of Cypress Semiconductor Corp., "frequently jets east to testify before congressional committees." It also stated that "some have suggested that his extracurricular activities have distracted Rodgers from running his company."
In fact, Rodgers testified six times in 15 years on issues of direct concern to Cypress and other Silicon Valley corporations. Such issues include his recent call for an end to corporate welfare--direct subsidies to corporations by the government--which was supported publicly by 79 Silicon Valley CEOs, including Rodgers.
The second reference contended, "There's no love lost between [IDT CEO Len] Perham and Rodgers." The article did not intend to suggest that Rodgers has ever disparaged Perham in any way or that the Cypress-IDT rivalry is anything other than a competition typical of two successful Silicon Valley semiconductor companies.
The third reference speculated that Rodgers "likely had IDT in mind when he wrote disparagingly [in his 1993 book, No Excuses Management] of 'the ultimate hypocrisy of warm-and-fuzzy cultures that don't deliver.' " In the book, Rodgers clearly identified American Microsystems Inc. as the quintessential warm-and-fuzzy culture.
|EB welcomes comments from readers. Letters should be 200 words or less. We reserve the right to edit correspondence. Mailing address: Electronic Business, 275 Washington St., Newton, MA 02158. Fax number (617) 558-4470. E-mail firstname.lastname@example.org. Reach us from the Web at email@example.com.|
The fourth reference stated, "IDT has already nearly abandoned the price-sensitive cache SRAM segment, and is focusing on the niche aimed at communications segments." The article did not state--and did not intend to state--that Cypress is, or has ever been, in the cache SRAM business. In addition, while IDT's Perham states in the story, "It looks to me like the SRAM business is going to be under duress for the next 10 years," he did not say Cypress' strategy was a fool's errand.
The fifth reference stated, "The author of No Excuses Management offers this excuse for [Cypress's 1997] performance [in the company's annual report]: '[We] were disappointed that the SRAM slump continued unexpectedly for another full year.' "
On the cover of the 1997 report, Rodgers continued his longstanding practice of quoting the concluding line of his previous year's shareholders' letter. The quote on the cover of the 1997 report, from the 1996 annual report, "Cypress' 1997 target is to get back on the growth track with record sales," was juxtaposed with a graph of corporate revenue showing clearly that Cypress failed to meet its goal.
The sixth reference, in a sidebar with the headline "T.J. Rodgers on motivation," quoted another passage from No Excuses Management. The passage contained a joke Rodgers claims to tell periodically at Cypress about a desert tour guide who "motivates" his camel to travel long distances without water by cracking two bricks together on the animal's private parts.
The passage's concluding paragraph, which was not included in the sidebar, states: "Top management carries the bricks. We routinely make demands of our middle managers that we have no business making--demands that hurt. But we have no choice. Trying to compete by outspending Intel or Motorola or the Japanese is a road to corporate suicide. We compete by using less money more creatively than the Japanese or any of our American rivals. At Cypress, no waste is a way of life."
Since this story appeared in Electronic Business, both Cypress and IDT have reported their quarterly earnings. For the quarter ended Sept. 28, Cypress reported revenue of $126.0 million, up 5.3% from the previous quarter. The company reported a quarterly net profit of $513,000, or $0.01 per share. Earnings in the third quarter included a tax benefit of $3.0 million primarily resulting from a change in estimate for additional R&D credits.
For the quarter ended Sept. 27, IDT reported revenue of $130.6 million, a 2.9% decrease from the previous quarter. The company's quarterly net loss--including non-recurring charges of $216.6 million related to asset impairment, a provision for taxes and a restructuring charge--was $237.1 million, or $2.88 per share. Excluding one-time charges, IDT's proforma pre-tax operating figures resulted in a quarterly loss of $20.3 million.
Electronic Business regrets any lack of clarity on any of the points above.