Company Profiles – Infineon

In 2000, the first reporting year, Infineon’s annual report was written in a euphoric style: The company was “beating its sector,” and reported a EPS of 1,83 against 10 cents for the previous year. The euphoria can be explained even more when we take into account more earnings data (the 10 cents in 1999 where preceded by -1,29, -0,16 and 0,19 in 1996). The revenue growth “outstripped the semiconductors sector. Volker Jung was chairman of the supervisory board, Ulrich Schumacher chairman of the management board.

Although financial analysts still “saw the company as a traditional memory chip-maker, it was moving into a communication chips.”

Mobiles phones and televisions were the market where to highest growth rate were found. Communication IC’s made up 25% of the revenues, memory chips about 15%.

The motto of the company was “never stop thinking,” which it still is: the current website complements this with: never stop learning and developing.” Thinking and learning is not enough though, it is only the basis: “the more we think, the more we produce.” This is linked to the R&D expenditures.

The report showed a long list of partner companies, explaining that “in a dog-eat-dog world of semiconductors, partners are essential.” In 2000 the company partners with 20 other companies, like AMD and Cisco. “The world changes so fast that together we know more.”

And things did change. Where the company was top supplier in the second generation mobile phones, enough changed to enter e restructuring and reorganization program that still continues under the president and CEO Dr. Wolfgang Ziebart. During two years of the three years restructuring (2006 and 2007) the company reported a loss of 0,36 and 0,49 per share. (Annual report 2007).

As many others, focusing is the strategy to escape the situation. This is done by focusing on “businesses that have similar factors for success.”

The former memory business has been affected. In 2006 this division was separated by an IPO. The division was not to be combined due to “an increasing divergence of success-factors.” It is no listed on the NYSE as Qimonda.

The remaining investment portfolio is concentrated on businesses with “an excellent outlook worldwide in terms of market share, innovative capability and customer access.”

Infineon technologies is now divided in three sectors, automotive & others, communication and memory products. But more important for customers is their dedication: to energy efficiency (f.e. air conditioners) communications and security (like cash cards).

Now it is all focus, like the program: “focus on 10” a company awareness program to achieve a profit margin of 10% EBIT.

The 2007 reports of a new introduced value system (already added in 2006) but previous values have not been communicated in an annual report. The new values are: we commit, we innovate, we partner and we create value. These are based on the four pillars of infineon: customer focus, operational excellence, profitable growth and collaborative leadership.

On the Frankfurt Stock-exchange, the price is in progress of a recent rebound when writing this: 6,90) from an all time low of about 4 euros.

Hans Bool

Source by Hans Bool