Author Archives: Mike

About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

New Leaders for Mentor?

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It’s one thing when one high-profile corporate raider wants a piece of you. But three?

That’s the queasy situation Mentor finds itself in today. The company’s board, which fended off Cadence a couple years ago, is now fighting for its life, having incurred the ire of two of its major shareholder groups by switching the date of its annual meeting, thus making it difficult for the dissidents to propose their own slates of directors. And they aren’t the only ones who could make life difficult for the EDA software company.

It’s never good to be in the middle of a battle with shareholders whose funding and access to capital is several times greater than yours. It’s especially not good when you have lost a net $65 million over three years and are seen as a bountiful treasure chest that just needs unlocking.

For 18 years Wally Rhines has been a steady hand at the helm of Mentor. Sadly, it’s looking more and more likely he won’t make it to 19.

On Deals Never Done

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About three years ago, Cadence made a play for EDA competitor Mentor Graphics, an offer the latter never seriously considered. That move, coupled with sharply falling revenues, cost then Cadence CEO Mike Fister his job.

On Friday, the San Jose Mercury-Times reporter Steve Johnson asked current Cadence chief executive Lip-Bu Tan about that merger attempt. While Tan doesn’t specifically address that deal, his words are telling: “In general, industry consolidation is always good.”

It’s a bit frightening to consider a PCB CAD world with one major player taking up the lion’s share of the North America and European markets. (Zuken more than holds its own in its native Japan.) As we learned when AT&T dominated the phone equipment and services market, monopolies (or near monopolies) are the enemy of innovation. Let’s hope it never comes to that.

28 and Counting…

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Key Tronic, our EMS Company of the Year for 2009, keeps making our choice look good.

It reported yet another quarterly profit today, bringing the streak to 28 straight quarters. That’s seven years in a row without a losing quarter, the longest streak among publicy traded EMS companies we can think of.

Congratulations — we know it wasn’t easy.

More on Capacity

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After reading my post last week about how bottom line growth hasn’t necessarily been tracking with topline growth, a friend of mine points out:

Remember that costs are out of control: during the past 12 months gold is up 30%, laminate about 10%, copper, tin, chemicals also 8-10%. The dollar is down (a whammy for multinational companies). So, I would just guess, depending on mix, etc., that a 15-20% sales increase is needed to just stay even with the blended increase in costs on a static year-over-year volume/mix. The more gold (cost) or bleeding-edge technologies (scrap) products produced the top line number needs to go even higher just to stay even. And we have not even discussed the cost of capital that for weak balance sheets is most likely higher. Meanwhile, the market is demanding price concessions – especially from the high volume tech consumer OEMs (read: Dell, Apple, HP, etc.). My guess is that as an industry our gross margin has decreased during the past year, and if costs continue to escalate without commensurate price increases it will do so again this year as well.  

All true, of course. And all the more reason to control capacity, because fabricators can’t dictate gold prices, currency ratios, or market demand. All we can do is to (try to) make sure our industry as a whole moves in tandem so that a handful of companies don’t wreck the pricing for the entire market.

And yes, much easier said than done.

The Right Place

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I don’t usually toot my own horn, but I’m proud of this interview with a number of leading placement companies. Unlike the usual industry “interview” — which consists of written answers to a list of emailed questions — we managed to get all the parties in the room for a face-to-face sit down. And kudos to Greg Berry from Assembleon, Kevin Clue from Universal, Bob Black from Juki and Steve Pollack from Essemtec for keeping their competitive instincts in check long enough to provide a candid discussion about today’s pick-and-place platforms.

We’ll try to organize something similar with a group of soldering equipment vendors in April. If there is something you would like to see asked or otherwise covered, feel free to email me or post a comment here.

Handing Over the Reins

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Great article in this week’s Newsweek by Yale dean Dr. Jeffrey Sonnenfeld recapping the struggle a technology innovator has in ensuring his or her vision lives on after he/she leaves the scene. Key quote:

How do you maintain the DNA that the founders have imprinted into the business? … Time and again, they share a disdain for any distraction about their own mortality. Like monarchs, they often believe they can and should reign as long as they live.

One nit: While this tale of hits and misses among ground-breaking tech companies (Apple, Digital Equipment Corp., IBM, Polaroid) makes for a fascinating trip back through time, Dr. Sonnenfeld doesn’t save much discussion on how to properly prepare your own bench for someday manning the ship.