Tag Archives: reporting

Fewer Reports Not in Altium’s Best Interest

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Always a company that operates behind a veil of mystique, Altium will take that secrecy to a new level with its latest board decision which pares its quarterly earnings reports to semiannual announcements.

In a statement today, the PCB design software company said the decision came about following an investor roadshow in Sydney and Melbourne in February, where management pitched the notion that the quarterly reports somehow — and I’m reading between the lines here — distorting and negatively affecting the market perception by obscuring the “steady annual growth delivered by Altium” over past years.

“The overwhelming view of the investor community was that Altium has reached a level of maturity that allows it to focus on driving its business and, consistent with market practice, provide full year and half year reporting,” the company said.

OK, then.

The great thing about quarterly reports is that they force a company to be upfront with investors on a regular basis. Dial that back, and investors are going to make decisions based on data that are often less clear. I’ll be surprised if there’s any mass selling, given that many of Altium’s major shareholders are insiders, with current CEO Aram Mirkazemi holding about 9% of the company directly and more than 11% through holding companies, with the board holding more than 20% of the shares overall. But I suspect they will have a more difficult time attracting institutional investors.

Altium has set as a goal $100 million in annual revenue by fiscal 2017. It’s at an annual run rate of about $75 million right now. As companies get bigger, they need to keep in mind that their responsibility to their investors grows as well. We’ve been supporters of Altium’s unconventionality in the past, including the move to Shanghai, which some predicted would be the death-knell of the company. If anything, Altium has been very willing to think out-of-the-box, to its benefit. Reducing its earning reports is an ill-advised decision, however.

For $12B, Google Buys Motorola’s Insured Supply Chain

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The Google-Motorola deal announced last week is about hardware manufacturing capability.  In other words, Google just paid $12.5 billion for a gadget supply chain with over 20,000 patents as the cherry on top.

As Chris Nowak put it in a recent article in Environmental Leader about quality management in a modern supply chain, “Today’s business problems include how to compete with a supply chain like Apple’s – a bristling hot pot of electronics suppliers and logistical hubs that delivers a customized, monogrammed electronic gadget in 3 days or a book you order today that’s delivered tomorrow, or the sneakers that you design to wear next week.

“Like it or not,” writes Nowak, “this is today’s competitive field.  All this speed still has to be cost-effective, innovative, compliant and risk-analyzed for whatever market it’s being made in and sold into.  Today’s global supply chain has blink-fast distribution demands.”

It couldn’t be more true.  What Motorola has is a hardware supply chain for gadgets comparable to Apple’s; now Google has one too.  That’s a large chunk of the $12 billion, and that chunk that was worth it.

The environmental compliance piece. What’s notable from our point of view is that Motorola has in recent years made significant efforts in its supply chain environmental compliance.  Their supply chain risk in terms of compliance vulnerabilities is low, low, low.

Motorola has for years been actively collecting supplier chemical information, fortifying compliance efforts with REACH, RoHS and other environmental regulations — imposed by both government and industry alike.

Did Google see that as part of the value?

Did Google acquisition executives see this material disclosure data as significant portfolio gold that may continue to return value?

As regulations tighten worldwide and the pressure mounts to know what’s happening at the chemical level in an electronics (or in any discrete manufacturing) supply chain, Google will know.  Their competitors?  Not so much..

Microsoft, Apple and Oracle have a new and sudden weak spot. While the term material disclosure has more than one meaning, some call it “supply chain insurance.”  Here’s how Motorola — in just a few years — has insured its supply chain.

“We require our suppliers to disclose an extensive list of Motorola Solutions’ banned, controlled and reportable substances as well as request recycled material content for each part supplied to Motorola Solutions,” says the company.  “We do this to fully understand and track the material content of our products, to comply with regulations, prepare for future regulations and control and improve the environmental profile of our products.”

This is not a partial approach.  It’s bold and thorough.

If you think about all the law suits that fire back and forth between the tech giants like Google, Apple, Microsoft and Oracle — the giants without material disclosure insurance seem suddenly keenly vulnerable in the environmental, sourcing, and quality assurance heel.

Motorola’s material disclosure advantage. Motorola Solutions — in its corporate documentation — discusses how its taken a proactive approach and compiled a list of 63 substances (or substance groups) targeted for exclusion, reduction or reporting during the design and manufacture of products. The list is divided into three sections:

  1. Banned substances which are not allowed for use in any Motorola Solutions product at any level
  2. Controlled substances which are limited for use in manufacturing processes or certain product applications (use limitations are typically defined by national or international environmental regulations)
  3. Reportable substances which are are not currently banned or controlled for use, but are likely to be in the future or the company has identified the need to understand their use as part of a environmentally conscious design process and/or for end-of-life management

Motorola has for years now required its suppliers to fully disclose information on the materials composition of parts and components, including information on substances of concern and recycled material content.  The company collects, stores and published information about internal efforts in researching alternative materials and stewardship regarding batteries and other end-of-life concerns.

Regulatory specifics. Motorola has been a leader in recognizing that many countries around the world have implemented regulatory restrictions on hazardous substances.

  1. European Union’s directive on the restriction of hazardous substances (RoHS):  Motorola Solutions complies with the European Union’s directive on the restriction of hazardous substances (RoHS) for electronic products sold in the EU. The company voluntarily extended compliance with the European Union’s restriction of the hazardous substances (RoHS) directive to cover all newly designed professional and public safety two-way radio products as well as mobile and wireless products for the enterprise, regardless of where they are sold worldwide.
  2. China Management Methods:  China’s Management Methods for Controlling Pollution from Electronic Information Products requires manufacturers to report and label usage of the same six hazardous substances listed in the EU RoHS Directive affective as of March 1, 2007. All Motorola, Inc. and Solutions products manufactured after March 1, 2007 and shipped into China comply with the labeling requirements of China Management Methods.  Motorola posts a direct phone line where you can call to get more information.
  3. REACH:  REACH, the European Union substances regulation that entered into the force of law on June 1, 2007, has notable phased deadlines to 2018. The broad regulation requires communication throughout the supply chain, and Motorola Solutions has been “actively sharing information to meet our obligations and help our customers meet theirs.”

The Wily Larry Page. Acquiring Motorola Mobility’s environmental compliance and collection of material disclosure information from suppliers may not be the final straw that flips the other turtles onto their backs.  But it may.  In the meantime, the value of the logistical aspects of Motorola Mobility’s logsitical supply chain is not to be overlooked.

Not everything Larry Page, Inc., also known as Google, has done in 2011 has been amazing, but this deal is a smart, wily, forward-thinking acquisition for a number of reasons — from risk management right down to the chemical level.

EPA Denies Requests for Chemical Confidentiality

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Last summer, the Environmental Protection Agency (EPA) stated it would reject confidentiality claims for chemical identity in health and safety studies (see our previous post: EPA to reject confidentiality claims).

EPA says it already notified five companies that the identities of 14 chemicals associated with a number of health and safety studies submitted under the Toxic Substances Control Act (TSCA) and claimed as confidential are not eligible for confidential treatment.  The chemicals were unnamed.

More chemical names connected with health and safety studies will be released in the future.

This newsflash is of particular interest for those that manufacture (defined by statute to include import) and/or process chemical substances and mixtures subject to TSCA (15 U.S.C. 2601 et seq.).

“The public deserves access to critical health and safety information on chemicals, but if the name of the chemical is kept secret in the health and safety report, the information is of no real value to people,” said Steve Owens, EPA’s assistant administrator for the Office of Chemical Safety and Pollution Prevention (OCSPP).

Owens said the agency is committed to increasing the American people’s access to this important information.

And the caveat is…The agency plans to deny confidentiality claims for chemical identity in health and safety studies provided to the agency under TSCA.  The only caveat comes if and when your chemical identity contains process or mixture information that is expressly protected by law.  That will take some convincing.  And some research and legal expertise.

Timeframe: 31 days. So how long do companies have to pursue the caveat or, if not, to watch their data go public?  The last paragraph of the EPA letter sent to companies states:

“EPA will make the information available to the public on the thirty-first (31st) calendar day after the date of your receipt of this determination…”

For more information on chemical transparency initiatives in U.S. manufacturing, go to: http://www.epa.gov/oppt/existingchemicals/pubs/transparency.html

For information on technology to manage chemical transparency initiatives in US manufacturing, try the products page on the Actio  website or try: http://www.materialdisclosure.com.

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