Brooktree Corp. : Big Things Expected of Computer Chip Firm

The prediction that a company will go from less than $2 million in sales in 1986 to “hundreds of millions” by 1992 would be received with a dose of skepticism by many listeners, now matter how spectacular the company’s technology.

But the man making the prediction in this case is Brooktree Corp. Chairman Myron Eichen, who insists that his firm will become a “major company” over the next decade. Given Eichen’s track record of nurturing more than a dozen successful San Diego-based high-technology companies, including IVAC Corp., Sharp Laboratories, Sorrento Industries and Computer Accessories, Eichen’s predictions merit close attention.

Brooktree, which began operations in 1983, makes an integrated circuit used in computer graphics systems that converts data from digital to analog formats, a task that previously required 25 separate chips, he said. Brooktree’s chip has no competition and is a big hit: sales are increasing at a 20% per month clip, Eichen said.

1986 Revenues

Volume shipments of the chip did not begin until late last year, so Brooktree chalked up revenues for 1986 of only $1.8 million. But revenues will exceed $10 million in 1987 and increase geometrically over the next several years, Eichen said. Customers include the brightest lights in computer graphics industry including Sun Microsystems Inc., Apple Computer Inc., Toshiba, International Business Machines Corp., and others.

Of the 30 to 40 start-up companies Eichen has been involved with in more than a quarter century of entrepreneurship--he received a San Diego Entrepreneur of the Year award last week from Arthur Young & Co. and Venture magazine--Brooktree is by far his most promising, he said.

Although his practice in his previous ventures has been to stay in management only through the company’s initial start-up phase, Eichen said he will stick with Brooktree at least until it goes public, an event that may not be that far off, he said.

Closely held Brooktree already has attracted dollars from outside investors, most notably from State Farm Insurance, which invested an undisclosed sum in exchange for more than 20% of Brooktree stock. Fairchild Semiconductor Corp, a division of Schlumberger Ltd., invested $3.6 million in the company, enough to gain it a 5% ownership stake.

Brooktree also signed a licensing agreement giving Toshiba Corp. of Japan the right to use Brooktree’s data conversion technology in the manufacture of compact disk players. Terms of the agreement were not announced.

The company’s major asset is “Brooktree Matrix” data conversion technology developed by Los Angeles scientist Henry Katzenstein, also Brooktree’s co-founder and chief scientist. Brooktree’s other top executive is President James Bixby, who formerly was director of engineering at Spin Physics, a division of Eastman Kodak Co.

Eichen, a 57-year-old Los Angeles native, is a self-taught engineer who never graduated from college. He is described, nonetheless, by associates and co-investors as an engineering prodigy with the uncanny ability to see market applications for a broad range of technologies. Eichen typically takes over management of a company when its assets include technology and little else and then forms a company’s management team, secures financing and signs up a board of directors.

Prominent Investors

Over the years, Eichen has attracted a coterie of prominent San Diego investors who in some cases have followed him from investment to investment. The group includes PS Group Chairman Paul Barkley, Collins Development Co. Chairman Harry Collins, Ventana Growth Fund principal Duwain Townsen, IVAC co-founder Heinz Georgi, former Mattel Inc. executive Walter Ross, Encinitas physician Ronald Summers, and Paine Webber broker John Sieber.

Eichen has been an entrepreneur since 1960, when at the age of 30 he and other General Atomic scientists left GA to form Sharp Laboratories. The core technology of the company, an instrumentation technique for detecting beta radiation, was developed at GA by Eichen and Rod Sharp. Among the engineers Eichen later hired at Sharp was Richard Cramer, who would go on to lead IVAC, IMED and most recently Fisher Scientific Group.

Three years after Sharp’s founding, sales were up to $3 million and Eichen and other stockholders sold out to Becton, Dickinson & Co. for an undisclosed amount. While at Sharp Laboratories, Eichen took over management of Hydro Products, a maker of remote-controlled underwater video equipment that was later sold to Dillingham Corp. and after that to a unit of Honeywell Inc.

In 1966, Eichen and a group of investors took over a company later renamed Ceramic Systems, which developed some of the first multilayered ceramic circuit boards and packages. In 1970, Eichen and other shareholders sold Ceramic Systems to Hewlett-Packard Co.

In the late 1960s, Eichen helped a group of Sharp Laboratories engineers, led by Cramer, to break away and form IVAC, which soon became a leading manufacturer of electronic thermometers and intravenous pumps. Eichen, who helped the company line up financing, owned 5% of IVAC stock before selling out at the company’s initial public stock offering in 1970.

Eichen, now a wealthy man, said he has been working because he wants to since the IVAC public stock offering, not because he needs the money.