For Cirrus Logic, back-to-basics bearing fruit
Jason Rhode got his second lengthy shot of national TV exposure as a tech executive last month. The CEO of Austin-based Cirrus Logic Inc. was sitting in a small video studio in Austin, talking live by satellite with CNBC’s Jim Cramer of the high-energy investment show “Mad Money.”
Cramer, as is his wont, was talking a mile a minute, and Rhode — who had an audio link but no way of seeing Cramer’s on-camera gyrations back in New York — worked hard to get a few words in edgewise.
“It was fun and kind of weird,” Rhode re- called last week. “I couldn’t see him at all.”
Cramer, as it turned out, was really high on Cirrus’ stock, citing the chip company’s growing business ties to Apple Inc.
Cirrus is reported to supply audio processing chips for portable media players (the iPod), smart phones (the iPhone) and tablet computers (the recently launched iPad).
Rhode, like all good Apple suppliers, is careful not to say much about his company’s largest customer. Apple prefers to keep its component suppliers far in the background.
“Some customers don’t like it when suppliers talk about them, and we try to be respectful of that,” Rhode told Cramer.
But Rhode didn’t have to say anything. His company’s annual financial disclosure report said it all. Apple accounted for 36 percent of Cirrus’ sales for the year that ended in March, up from 16 percent the prior year.
The growth in sales to Apple gave the Austin company a big jolt of revenue growth — upward of 26 percent — and a huge boost in profit, which expanded by 10 times, to $39.4 million.
Wall Street noticed. The stock, which was below $2.50 a share in early 2009 at the height of the recession, advanced strongly this spring. It has nearly quadrupled in the past
year, closing Friday at $17.64.
Meanwhile, other tech stocks have lost altitude in recent months. The tech-centric Nasdaq composite index has risen less than 2 percent in the past year.
In May, Cramer told viewers the stock was a bargain. A month later, the stock had gained 29 percent.
“Mr. Rhode, you are a hero to me,” Cramer gushed on the air. “You have turned this around into a great company.”
In the vernacular of Cramer, it was a double boo-yah moment.
Rhode, who is a committed team player, used his few seconds left on the TV segment to note that plenty of other folks at the company have played big roles in the turnaround story.
(You can find a link to the nearly eight-minute clip on the home page of Cirrus Logic’s website, www.cirrus.com.)
Cirrus, which had toiled in media obscurity for years, suddenly is an overnight success story.
The company’s shareholders are smiling, its workers are upbeat, and it is adding jobs. Cirrus, which employed a little more than 500 workers at the end of March, hired between 20 and 30 more during the past quarter. That’s rapid growth for a modest-size tech company with specialized engineering needs.
‘Mr. Rhode, you are a hero to me. You have turned (Cirrus Logic) around into a great company.’
‘Mad Money’ host
“For technical people, this is a very fulfilling situation,” Rhode said. “It’s like being on a sports team. You feel like you are winning.”
A longtime engineer and product manager for Cirrus, Rhode took over as chief executive in 2007. He remembers well the time when Cirrus wasn’t winning — when its attention seemed scattered in too many directions.
As a novice CEO, Rhode said, he tried to do a few common-sense things.
He focused on fewer product areas that fit well with the company’s traditional strengths. He hired more good engineers during a down economy, when there were signs that some of the company’s new products were starting to catch hold. And he and the rest of management worked to make sure employees felt appreciated and in the loop.
The company concentrated on developing innovative audio chips — a longtime Cirrus strength — and an energy-related product line with chips that go into products such as smart power meters.
Then Cirrus’ ties as a reliable supplier to Apple took off as that company’s smart-phone and tablet computer business exploded. Tear-down studies of the iPhone 4 and the iPad have revealed Cirrus audio chips — selling for a little over a buck each — right in the middle.
The chipmaker says it is spending a lot of time developing new products for mobile Internet devices.
Last month, Cirrus announced two new products: a low-power audio coder-decoder chip designed for smart-phone applications and a low-power audio amplifier chip. Both are designed to deliver high performance while conserving battery power, which is crucial for mobile devices.
Now Cirrus is planning to build a new corporate headquarters on West Sixth Street downtown, which Rhode says will improve the company’s work environment while saving money. Work hasn’t started, but the building is expected to be ready for move-in two years from now.
“It’s funny how some of the most important wisdom in running a company is basic common sense,” Rhode said. “You should focus on something that you are truly good at and make sure that it is an area that you can be really excited about.
“There has been a lot of progress in our audio business over many, many years,” he said. “The company had so many other things going on. We have cleared things away. Some of the debris is not there anymore, and we are consistent about not straying from the areas of our strength.”
Jason rhode CEO credits co-workers, common sense for turnaround.