New Chips Power a Major Surge in Stock of Tech Firm.AFTER a brief spell of relative quiet, International Rectifier International Rectifier Corp. (NYSE: IRF) is a manufacturer of power semiconductors (MOSFET, IGBT, diodes and thyristors), located in El Segundo, California, USA. It has a market capitalization of 2.48 billion USD and is listed on the S&P Midcap 400. Corp. is again setting the stock market on fire. When the El Segundo-based company announced on June 22 that it would produce a new generation of power chips, its share price jumped from $49.50 to $55. It was trading as high as $59 last week, before closing at $55.13 on July 5. The new chips, called power integrated circuits Power integrated circuits Integrated circuits that are capable of driving a power load. The key feature of a power integrated circuit that differentiates it from other semiconductor technologies is its ability to handle high voltage, high current, or a , fine-tune the power consumption of household appliances, such as washers and dryers, and will be used by major manufacturers -- Maytag, Frigidaire and Electrolux, among others -- that want to develop more energy-efficient products. The next-generation chips are also the most recent step in the company's ongoing transformation, from being primarily a maker of power semiconductors for the components market, to being a designer and developer of more-differentiated power management solutions. Whereas competition is stiff and margins slim for manufacturers of the most basic and commonly used power chips, there is a growing need for highly specialized power systems designed for a specific product and client. "These are proprietary, multi-year agreements with large clients in the automotive and household appliances industries, among others," said Robert Grant Robert Grant may refer to:
n. A device driven by the engine of a vehicle that facilitates the turning of the steering wheel by the driver. power steering Noun systems." It's International Rectifier's move into the new power systems market segment that has investors particularly excited, because it puts the company at the vanguard of a highly profitable, less cycle-dependent segment of the semiconductor industry. "Historically, the company has done well in an up cycle and badly in a downturn," said Todd Cooper Todd Cooper (born June 25, 1983 in Kidderminster) is a freestyle and butterfly swimmer from England, who competed at the 2004 Summer Olympics in Athens, Greece. There he finished in 22nd position in the 100m Butterfly. , an analyst with Stephens Inc. "By diversifying into more value-added products, they are going to be less exposed if and when the current cycle comes to an end." The semiconductor industry has been notoriously cyclical and is currently going through a period of strong growth, said Cooper, the end of which is not yet in sight. Driving the growth is, among other things, the ever-increasing demand for lighter, faster and more powerful electronic devices, such as cell phones and computers, that require power-management solutions to optimize their performance. High industry demand, together with International Rectifier's inroads inroads Noun, pl make inroads into to start affecting or reducing: my gambling has made great inroads into my savings inroads npl to make inroads into [+ into next-generation power management chips, has given the company's bottom line a very substantial boost. For the fiscal third quarter ended March 31, the company reported net earnings of $21.7 million (38 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ), compared to $4 million (8 cents per share) for the like quarter one year ago. (That beat analysts' consensus estimate by 10 cents per share.) Revenue was $197.9 million vs. $137.6 million. The company has not yet released earnings for the fourth quarter or fiscal year 2000, which ended June 30. However, analysts are projecting big increases again. The consensus estimate for fiscal 2000 earnings calls for $1.17 per share, vs. 12 cents per share in 1999. And analysts' estimates for 2001 are as high as $2.23 per share. "They've become very broad-based and are targeting all the sweet spots in the market," said Vincent Benedetti, an analyst with Gruntal & Co. "They're in handheld devices, automotive products and industrial products, and with their new proprietary products, we expect to see gross margins increase quarter over quarter." With International Rectifier's proprietary power-management chips in many popular, portable electronic products -- from Motorola cellular phones, to Sony's Play Station II, to notebook computers running Intel's Pentium III The successor to the Pentium II from Intel. Introduced in the spring of 1999 at 500 MHz, the Pentium III architecture was similar to the Pentium II with the addition of 70 new instructions optimized for multimedia (see SSE). microprocessor -- Benedetti believes the upcoming back-to-school season and Christmas holiday season will produce another huge wave of demand for the company's chips. Accordingly, he has set a target price of $75 for International Rectifier's shares over the next six months, and rates them a "strong buy." Other analysts that follow the company also rate it either a "buy" or "strong buy," even though the share price has been climbing steadily over the past 12 months. One year ago, the shares traded as low as $12.94, but a succession of positive earnings surprises and new products has made it one of the best-performing stocks in the semiconductor industry. SUMMARY Business: Power semiconductor manufacturer Headquarters: El Segundo El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. : Alexander Lidow Market Cap: $3.1 billion Dividend Yield: N/A [*] Total Liabilities: $158.6 million P/E Ratio P/E ratio Current stock price divided by trailing annual earnings per share or expected annual earnings per share. Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25.50 = 10 times $2.55. XYZ stock sells for ten times earnings. : 92.19 Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. : $5.3 million (*.) International Rectifier does not pay dividends. |
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