To say 1995 was a good year for Semtech Corp. of Newbury Park might be an understatement. It was an electrifying year for the semiconductor company.
As a result, Semtech just was ranked fifth on the Bloomberg 100 list of top-performing stocks of 1995 on the New York and American stock exchanges and the Nasdaq National Market. The inaugural list was published earlier this month by the Bloomberg Financial Markets Commodities News of Princeton, N.J.
Semtech stock closed the year at $19.40, up 641% over the previous year. It currently stands at about $19.
The company’s stock market success coincided with a rise in sales and revenue. Semtech reported income of nearly $5 million on sales of $44 million for the nine-month period ended Oct. 29, in contrast to income of $701,000 on sales of $24.3 million for the same period in 1994.
Officials at Semtech credit the recent success of the 35-year-old company largely to its ability to change course midstream.
“About four years ago, the company set upon a strategy to convert our focus from primarily military markets to commercial markets,” said David Franz, Semtech’s chief financial officer. “A key to the success of that strategy was the company’s ability to identify significant trends in the market before they became evident to our competitors.”
Within the last 1 1/2 years, Semtech has introduced lines of linear voltage regulators and transient voltage suppressors that have kept it on pace with constantly changing electronic technology.
The regulators, Franz said, allow an electrical system to be converted to a lower voltage. “The best example of its use is with PCs,” he said.
“Where all the parts of a PC previously operated off of five volts, in the last year we’ve seen microprocessors running on 3.3 volts. That step down in power has a lot to do with increasing performance.”
Semtech’s suppressors protect electrical circuits from being harmed by outside power sources, including lightning strikes or static electricity.
Brent Clukey, a technology analyst for the Southcoast Capital Corp. investment bank in Austin, Texas, anticipates that 1996 will be another big year for Semtech.
“They picked a couple of product areas that they knew would have explosive growth and they positioned themselves well to take advantage of that growth,” he said. “All the products they make guarantee the delivery of clean, well-regulated voltage. That’s a growing area that’s very necessary for certain equipment.”
Voltage regulators, he said, are in particular demand by users of microprocessors.
“In 1995, only about 50% of the microprocessors sold needed [a regulator]. In 1996, about 100% will need this,” Clukey said. “Even with a flat market for microprocessors, which nobody is predicting--we’re thinking maybe a 20% increase--the market for these voltage regulators will double.”
Semtech’s performance last year was also aided by the Oct. 4 acquisition of ECI Semiconductor of Santa Clara, a deal valued at about $20 million. ECI manufactures semiconductor parts for companies in the Silicon Valley.
“That gave us our first presence in the Silicon Valley,” Franz said, “and thus access to services in that area.”