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Electronics Instruments &
RF Monolithics, Inc.
4441 Signma Road
Dallas, TX 75244
David M. Kirk
Chief Executive Officer
Interview Conducted By:
Diane Reynolds, Co Publisher
Bio of President/Chief Executive Officer
David M. Kirk
Kirk was named President and CEO as well as a member of the Board of Directors, in
November 1999. Prior to this appointment,
David had been Vice President of Marketing for RF Monolithics, Inc. since June 1998. His goal is to use his engineering expertise and
marketing talents to provide leadership in the coming years. Prior to joining RFM, David was a successful
marketing executive for fourteen years, holding various positions at Murata Electronics
North America, Inc. David holds a
Bachelors degree in electrical engineering from Clemson University in South
RF Monolithics, Inc. (RFM), founded
in 1979, designs, develops, manufactures and markets a broad range of radio frequency (RF)
components and module products for the automotive, telecommunication, consumer,
distribution and industrial markets. The
Companys products serving these markets are the Low-power Products Group, which
include components and Virtual WireÒ
Short-range Radio, products; and the Communications Products Group, which
includes filter and frequency control products.
RFMs core technologies include
Surface Acoustic Wave (SAW) technology and RF circuit design expertise. SAW technology allows devices to convert RF
signals to mechanical waves that implement very precise RF filtering and frequency control
functions. The Companys customers also
benefit from its RF circuit design expertise. RFMs
engineers understand the complexity of RF design and the many problems our customers
encounter when developing a wireless product or application. These core technologies
enable RFM to remain competitive by offering a diverse range of products and providing
value-added solutions and functionally integrated products, which gives customers a
competitive edge in development of wireless applications.
CEOCFOinterviews: The company itself, people may have
heard of the name or a little bit about it, but give them a round off view of the company
as it stands today.
RF Monolithics, is an electronic component company. The
technology behind the company is called SAW Devices, Surface Acoustic Wave,
and that is a type of technology where you take an electrical signal and turn it into
mechanical and then back to electrical using the mechanical properties of the sub stream. So, with that, we make a variety of electronic
components to filter, to osolators, and resonators. The
market that we are probably most well known for is in the resonator business, our low
powered components business. We in fact
developed the product for remote keyless entries specifically for the automobiles and
weve got a very large market share in that product.
From that we developed into a variety of other products, a virtual wireless family
from osolators and from there we custom built. These
are the types of products. Marketplaces,
automotive, the telecom and base station area, a little bit of the optical network market
and a variety of industrial things such as remote meter reading and that type of thing.
CEOCFOinterviews: So, what you are trying to do is to eliminate the
use of wires all together?
That is correct. Specifically with the low
power of family of products, low power components and also the virtual wireless family,
weve got very good battery life with these products and then fairly high database,
in some of our products up to 1megabit per second of data that is capable of being
transferred. Some of the applications last
ten years on one battery, so, yes, exactly correct, eliminating the wires in full powered
CEOCFOinterviews: The different businesses you are addressing,
communications, industrial, automotive, consumer, where is the majority of the growth
Well, right now the automotive is our largest business, about 30% of our business. There still is some good life in that marketplace,
keyless entries being the main stay for us. The
new application is tire pressure monitoring and that is showing some growth and usage in
that particular marketplace. In the
industrial segment, the biggest area of growth is in automated meter reading. There is some government regulations that are
passing there with the deregulation of the power companies, and meter reading for water
meters, gas meters, electrical meters, the water meter being the most opportune one for
us, where in fact, long battery life on a meter, water meter for ten years transmitting
some information, so, there is some of the growth with the areas for us.
CEOCFOinterviews: Are you doing this on a global basis?
Some of the real strength is in fact serving these various and quite different
marketplaces, but then globally we do 45% to 48% of our business in North America, and 30%
in Asia and 15% or so in the rest of the world, so it is very good business for us.
CEOCFOinterviews: South America is a very underserved market. Are you addressing that market? Is it being received there?
Mr. Kirk: South America doesnt represent a
large market for us at this time. We do have
some electronic infrastructure, the base station market, that sort of thing, but not a
whole lot of opportunities in South America for us at this time. The real market that we see some very good growth
for us is in China. It is just a tremendous
amount of opportunities; Ive been to China two times this year myself. Opportunities for us are on the manufacturing side
as well as promoting and selling our products there.
is all of your manufacturing being done today?
Mr. Kirk: In the last two years we transitioned our manufacturing
our assembly off shore. We do front end fabrication here in Dallas, we now have four
partners, two in the Philippines, and one in Japan and one in Taiwan.
CEOCFOinterviews: Because the manufacturing is spread out so much,
how are you able to control the quality of the products?
Mr. Kirk: Well, we in fact, the main stay of our business are
automotive and automotive has to be ISO 9,000 and also a quality of regulation called QF
9,000. So, we in fact make sure everyone of our partners are ISO 9,000 or QF 9,000,
as we follow those standards around the world we can make sure we get the quality of
products that we need.
CEOCFOinterviews: I was reading that the actual demand for your
products is going up. Are you going to be
able to fulfill the need that is out there?
Mr. Kirk: With the additional partners, we started off with two
assembly partners and we since then have two more. We do believe we have the
production capability with these partners. We have also done some recent
investigation in China to make sure that we remain competitive and can support the demand.
So, yes, I believe we have the production capability to support the required
CEOCFOinterviews: What makes this company stand out among its
Mr. Kirk: One of the biggest things we have done is we focus on the
low power applications. Many of our competitors focus on hand set business, cellular
handset business. We in fact, try to stand clear of that particular business.
We have some good diverse communication with some communication businesses, some
automotive, some industrial and see it as a growing market in this low power opportunity
for us. Many people talk about Blue Tooth being low power short range, be we
actually in a slightly different market with a slightly longer battery life and we can see
some tremendous opportunities there. We continue to remain competitive with our
manufacturing off shore and we will continue looking at other opportunities such as China.
CEOCFOinterviews: China seems like a big move.
Mr. Kirk: Really, it is. I in fact have been there twice this
year. Great opportunities, weve seen a growth there in the cellular business,
not just the handset, but also the infrastructure. There is a growing market in the
automotive, but we also see a growing market for the meter reading as well. So, we
see great low cost production capability there and also a growing market there.
CEOCFOinterviews: Technology, as it evolves, plays a major role in
this company. How are you able to keep up with it all?
Mr. Kirk: We in fact have over forty patents at this time and we
continue to actually develop new patents. Most recently we have issued our next
generation virtual wire product. So, we do recognize that technology is constantly
changing, so we also want to maintain that we can be competitive, developing that, but
also in fact developing new smaller packages for our current products, so we have to
remain competitive on our current products but also make some new stuff.
CEOCFOinterviews: That is very important. Some people just
stay in one area and that is where they get lost.
Mr. Kirk: Oh, yes, you have to have a blend of maintaining your
base business, which our low powered performance is doing very well for us with some
growth opportunities in; the market and will remain that competiveneess with the off shore
assembly. As you mentioned, we do want to develop new products and the Third
Generation Virtual Wire being the most significant for us.
CEOCFOinterviews: Your customers, do you have your own sales force?
Mr. Kirk: We have a blend of manufacturer reps. and
distributors and weve got one vice president field and then about five area sales
directors that manage the fields force for reps or distributors. It appears to be
working very well for us at this particular time and it is in fact the most cost efficient
sales structure for us.
CEOCFOinterviews: Is there any one customer in particular you rely
on for the majority of your revenue?
Mr. Kirk: Weve got a variety of customers, but five top
customers added up to about 30% of our business, so we really are not dependant on any one
specific customer and that has really been our strength. Actually the market
diversification and customer diversification.
CEOCFOinterviews: Thats very important. Some people put
all of their eggs in one basket and then that basket runs out.
Mr. Kirk: It really does. Weve got that and also the
global business, the regional business that is 50% of our business in North America and
30% in Europe and Asia and that is really helping us here. In the last two years
weve done a tremendous job of restructuring, moving our assembly off shore and
maintaining this good balance of business.
CEOCFOinterviews: With all that has happened with 9/11, has this
affected your company in any way?
Mr. Kirk: I really have not seen a whole lot affect
financially, what we did learn was that our pipelines with our partners in Asia was cut
when 9/11 happened. So we have an increase inventory, more than we have expected, so
we decreased inventories as a total with our move off shore, but we felt we have reduced
them more than we have. Weve kept that pipeline a little bit more loaded so I
guess that is a financial invite, but globally we have seen a little bit of decrease in
our business, but we have weathered it nicely.
CEOCFOinterviews: Growth opportunities, do you see growth being
done internally or do you see acquisitions or other partnerships?
Mr. Kirk: Right now we are focused on our growth for internal.
Right now we have some very good products right now with some of our large and
growing marketplaces. That is the best half at this particular time. If an
opportunity comes up for a merger or partnership or acquisition and it is in the
shareholders best interest we will take a very good look at that. Right now we have
some very good products and we see some good growth opportunities.
CEOCFOinterviews: I was looking at your third quarter, which was
nice, is that because of the tax refund or because of the internal growth of the company?
Mr. Kirk: No, it was a one-time event. If you look at the
underline of that we had a very good improved quarter. Our gross profits were up as
we actually had guided toward the operating cash flow positive and that we have a pre tax
loss decreased so we did basically all of the things we said we were going to do.
The tax refund was nice; it was a one-time change and the number of years that we can
count back. So, we have basically said that was great, we took the tax refund but
look at the progress we are making and we will continue to make into the next quarter as
CEOCFOinterviews: Is this the second increase over the year before?
Mr. Kirk: I believe that is correct and we are making progress
quarter over quarter. The tax refund was nice bonus but we want to continue making
progress over our internal operations and we guided the fourth quarter, which ends in the
month of August we will in fact potentially have marginally profitable at the operating
CEOCFOinterviews: What did the impact of the analyst now covering
this company do for it?
Mr. Kirk: We believe that has been beneficial. It was
unfortunate that as we were continuing with this recovery program that both of our
national analysts lost their particular analyst. It has been very helpful here,
recently having some reasonable coverage and believe we are getting some visibility.
We attended our first show out in California in May and we will continue to work on
that as our progress improves.
CEOCFOinterviews: Going forward, even though the margins have
increased, does the company has the cash or credit to go forward with an acquisition or
partnership were to arise?
Mr. Kirk: Our relationship with our bank has been very, very good.
They have been with us for two years and theyve seen a tremendous amount of
success. Three quarters are positive cash flow; we do have availability in the line
to fund our current growth, so I believe we are in very good shape at this time.
CEOCFOinterviews: From a potential investors standpoint, they
are looking at this company for the first time; you want to spark their interest.
What would you say to them?
Mr. Kirk: I think that the key thing I would ask them to do is to
look at the couple of years we have had in recovery. We in fact have done very well,
we did exactly what we said we were going to do during that recovery process, weve
also weathered the significant down in the economy in that time period as well. Look
at that, look at the products that we have, the variety of markets we serve and we see
some very nice growth opportunities such as the tire pressure monitoring and meter
reading, both of those have some government regulations behind them that are in fact going
to make those happen, so we see good opportunities, we have recovered nicely, we have some
good competitive manufacturing, good growth opportunities, and right products for the
right markets right now, so we see some good opportunities for us in the coming years.
CEOCFOinterviews: You joined this company in 1999, what was your
biggest challenge when you came aboard?
Mr. Kirk: I joined the company as BP of marketing in the middle of
1998 so for a couple of years I was looking at the opportunities for our products,
tremendous we saw, right away we saw we had some difficulty in the manufacturing area to
be competitive, so in 1999 I became President and CEO and that was when we started
drastically changing the manufacturing things. We still have some great marketing
opportunities. That is what we are working towards; right now we have the
manufacturing place where we can make some of these opportunities happen.
CEOCFOinterviews: Do you have any closing comments for my readers?
Mr. Kirk: I look forward to any questions that may come away from
the actual interview; we are looking for a good 2003.
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