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RF Monolithics is a wireless solution provider in the low powered wireless
space with a variety of products for applications ranging from satellite radio to MESH
networked sensors
Electric Instruments
Controls
(RFMI-NASDAQ)
RF Monolithics, Inc.
4441 Sigma Road
Dallas, TX 75244
Phone: 972-233-2903
David M. Kirk
President and CEO
Harley E Barnes III
Chief Financial Officer
Interview conducted by:
Walter Banks, Publisher
CEOCFOinterviews.com
September 22, 2005
BIO:
David 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. 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 Bachelor’s degree in electrical engineering from
Clemson University in South Carolina.
Company Profile:
RF Monolithics, Inc. (RFMI), celebrating over 25 years of low-power wireless solutions, is
a leading designer, developer, manufacturer and supplier of radio frequency wireless
solutions enabling wireless connectivity for the automotive, consumer, industrial, medical
and communications markets worldwide, allowing our customers to provide products and
services that are both cost effective and superior in performance. RFMI’s wireless
solutions reach the market through mature worldwide sales and distribution channels and
are supported by industry leading customer service. RFMI business lines include RF
Components, including communications components, low-power components, and short range
radios; and Wireless Systems which includes standard sub-systems and software and OEM
products. For more information on RF Monolithics, Inc., please visit our websites at
www.rfm.com and www.wirelessis.com.
CEOCFO: Mr. Kirk, how
long have you been with the company and what changes have taken place since you have been
there?
Mr. Kirk: “I started at R.F. Monolithics in 1998 as the
VP of marketing. I served as VP of marketing for about a year-and-a-half and, late in
1999, I accepted the position of president and CEO. It has been an interesting journey.
Initially I focused on understanding the markets that RFM served, what the product’s
capabilities were and what the wireless application opportunities were. I quickly learned
there were some very interesting opportunities. In the 1999-2001 timeframe, after becoming
CEO, we began to restructure the company and transition our manufacturing out of the
United States. We selected three overseas assembly partners and worked closely with them
to insure our product quality was not adversely impacted by the relocation. As a result of
the manufacturing relocation, we downsized from over 600 people to about 200 people. We
are a lean, solid company at this point. We are debt-free and have sufficient cash in the
bank to meet our operating needs. We have also started a shift in our products as well. We
are changing our focus from our original base components business. We are now focusing on
being a wireless solutions provider by building on our base technology and low powered
radios to provide customers with a total wireless solution and not just components.”
CEOCFO: When you look at
the industry, will you explain to our readers the different components of the industry as
far as the possibilities for your products and how your products fit in?
Mr. Kirk: “We are a wireless solutions provider and when
most people hear that, they automatically think you are in the cell phone business,
handsets and that type of applications. We actually avoid the handset business. We do some
business in the cellular base station infrastructure but we are in what we would classify
as the low powered wireless space. We have a variety of low-power radios and protocols for
emerging applications such as MESH networking, satellite radio and tire pressure
monitoring. We created a website called www.wirelessis.com, which addresses these varied
applications. Since the marketplace is starting to explore the possibilities of networking
modules to create wireless sensor networks or mesh networking. We see some very
interesting growth opportunities in this area. It is opening up opportunities as we
move from being just a component supplier into being a wireless solutions provider.”
CEOCFO: Do you sell to
OEMs?
Mr. Kirk: “We sell to a variety of customers. We do sell
to OEMs. About 30% of our business is automotive and we sell to the tier-one suppliers who
supply the auto manufacturers for such applications as remote keyless entry and tire
pressure monitoring. In the satellite radio business we supply to subcontractors who
manufacture for the satellite radio suppliers, so we do significant business through
subcontractors as well.”
CEOCFO: On a press
release, I saw that you supplied a transceiver for the space shuttle.
Mr. Kirk: “That was a unique piece of business using our
low-power virtual wire transceiver product. The transceiver transmits and receives using
very low power and typically can operate off a coin cell battery for ten years. There were
a variety of those devices placed in the space shuttle to act as a wireless network
communicating temperature pressure and a variety of different measurements. We don’t
expect a lot of business in this shuttle market but it demonstrates just one of the unique
wireless opportunities not readily thought of by people.”
CEOCFO: How did that
deal come about?
Mr. Kirk: “Through a subcontractor here in Texas that
was working for NASA. We worked with them providing our transceiver and the technical
support to integrate it into their product.”
CEOCFO: Where are you in
the distribution of your products, is it North America or worldwide?
Mr. Kirk: “We do business worldwide. Just under 40% of
our business is in North America, 20% in Europe and about 40% in Asia. Asia has come on
strong over the last year-and-a-half; it may have increased five to seven percentage
points as far as the total of our business during that time. Much of the increase has been
due to growth in the satellite radio market. We provide filters for both of the satellite
radio service providers and a variety of filters to the subcontractors manufacturing the
radios that are then shipped into the United States. We classify the sales as to where we
ship the product and since many of the subcontracts are located in Asia, the sales are
recorded as Asian sales. Satellite radio service has grown dramatically as the number of
subscribers has dramatically risen. It appears there is still a large population eager to
pay a monthly fee to get 100-120 channels of music, and entertainment downloaded from a
satellite.”
CEOCFO: That is a field
aggressively promoted everywhere!
Mr. Kirk: “It is like cable television except it is for
the radio. You can get sports programming, news services; there are a variety of different
programming available. The subscription growth is expected to continue to be dramatic. I
believe the latest statistics projects that by 2010, there will be about 48 million
subscribers to satellite radio. It looks like it is definitely catching on. Satellite
radio is also being installed in vehicles, which is right inline with one of our
traditional markets. We are well known in the automotive market with remote keyless entry
and tire pressure monitoring.”
CEOCFO: Is your sales
model razor/razor blade; can you make money after a sale?
Mr. Kirk: “Historically, we have not had an
after-service type business model. We sell a product that the customers incorporate into
their end product. We have never offered software or maintenance contracts or those type
services.”
CEOCFO: Do you think you
have the financing currently to do this?
Mr. Kirk: “We have actually come quite a way in the last
couple of years. If you look back, we were at one point about $13 million in debt. Now we
are bank debt-free, and we have over $5 million of cash in the bank. This gives us some
opportunities to look for mergers and acquisitions, which we intend to do. We also
see some good organic growth opportunities with that cash availability. ”
CEOCFO: Where do you see
your growth coming from?
Mr. Kirk: “We have a solid base business right now with
some very good growth applications. For our base components business we see TDS-CDMA,
which is the cellular standard in China that will present some base station opportunities.
Also, Wi-Max is the next emerging wireless standard for 802.16. There are some filter
opportunities there. There is some good growth now and some future growth in our base
components business. Where we really see an opportunity is in the low powered radio space
where we can move further up the food chain by providing modules. The modules could have a
variety of different radios with a microprocessor and some protocol. This protocol could
be mesh network protocol, which allows the radios to talk to each other and form a
network. We see some very nice opportunities in that space, especially in the industrial
market where creating wireless sensor networks is going to be key. Right now, they have
many wired sensor networks but with this emerging low power wireless technology, we see
growth opportunities. Providing modules, moving into mesh networking, and also blending in
some of our RFIC technology is where we really see the company going.”
CEOCFO: What separates
you from your competitors?
Mr. Kirk: “In the components, there is probably not much
differentiation; since the components area is very competitive. Where we see the
separation is our move into the modules and RFICs. We provide a tremendous amount of RF
engineering expertise to our customer. We do not just give the customers samples; we give
them a half-day’s engineering services as well. We have field application engineers
around the world. Rather than just giving a sample and a data sheet to a customer, we
actually provide the RF expertise to assist in the integration of our product into our
customer’s products. Giving this technical support, especially to customers in the
industrial space where they are not as knowledgeable in RF technology, or maybe do not
have adequate resources, we see as distinctly separating ourselves from the
competition.”
CEOCFO: How do you reach
investors?
Mr. Kirk: “We get out to a variety of conferences; the
AeA Microcap in Monterey, and numerous other sponsored conferences. We recently retained
an outside IR service-- PR Financial Marketing out of Houston, Texas, to help us
communicate our story to investors. We try to get out and get in front of People as much
as possible.”
CEOCFO: So you have
float available for interested investors?
Mr. Kirk: “That would be right.”
CEOCFO: In closing, will you address potential investors?
Mr. Kirk: “RFM has a solid base business in components.
We are moving into some newer areas with our modules and mesh network solutions. We have a
proven management team which has worked together through the down cycle and restructuring
of the company. We recently added a VP of marketing as we began to more aggressive
implementing our strategic business plan and move into the development of modules and
RFICs. You will see many of these type products in current trade shows. As an example, we
are giving a presentation at the Wireless Sensing Solutions Conference, which is a
conference focused on wireless network sensor applications and products. I believe will
see more wireless networking applications moving into the industrial space. I would watch
for some very interesting things coming from our wireless systems group as we move
forward.”
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