Robbie Stephens Conference: Cirrus Awaits a Recovery

SAN FRANCISCO -- Cirrus Logic (CRUS) may have transformed itself over the last 18 months, but revenue growth still remains a quarter or two out, the company's newly appointed CEO David French said at the BancBoston Robertson Stephens Technology '99 Conference.

Cirrus is one of the few communications chip makers that have yet to see the dramatic growth that competitors such as Vitesse Semiconductor (VTSS) and TranSwitch (TXCC) saw last year. That's because Cirrus has been dragged down by unprofitable products such as graphic chips and modems.

That situation has pulled down Cirrus' stock from its all-time high of 61 1/8 in September of 1995 to 8 today -- a drop of 87% during a period when the Nasdaq Composite Index has more than doubled.

French said Cirrus can't be judged on past results anymore. A management overhaul that began in September is finished, as is a restructuring of operations started 18 months ago. The company has cut a third of its workforce, sold a test facility in California, ended a costly manufacturing arrangement with Lucent (LU) and is renegotiating a similar arrangement with IBM (IBM).

Revenues are expected to decline as much as 10% this quarter because of the loss of design contracts last year. Sales of new products, however, should show up during the second half of the year. Three product areas -- mass storage, integrated circuits for digital audio and precision data converters -- are high-margin niches in which Cirrus has competitive advantages.

Listening carefully, in the audience, was Eran Bendoly, CFO of Novanet Semiconductor, an Israeli company that makes integrated circuits for networking. "It seems that they have their act together," Bendoly said of Cirrus. "They are focusing on areas where they have unique expertise."

-- Marcy Burstiner

Looking at Larson

When investors decide whether to put their money into Network Associates (NETA), they're not just looking at the business. They've got to look at its management, too -- specifically CEO Bill Larson.

Larson, who zipped through his presentation at the Robbie Stephens conference, was high energy, as usual. He talked about the wide range of security software that the company now has and bragged about its leadership in several areas of network security including anti-virus scans, firewalls and other "Cybercop" products.

But the main draw for some here was Larson, an unabashedly boisterous and aggressive CEO who investors either love or hate. "He's done a great job, there's no doubt about it," said one Bay-area fund manager who nevertheless has stayed away from the stock.

Echoing the view of other money managers who asked not to be identified, he called Larson scary. "Come on, would you want to work for him? Can you imagine telling him that something's gone wrong with a project? That's when things go wrong and people try to hide them and hide them until it's too late."

-- Medora Lee

Getty Gets Digital

Robbie Stephens analyst Keith Benjamin calls Getty Images (GETY) one of his "most problematic Internet stocks" because the company has assets and earnings, making it difficult to value it against other Internet stocks. "Style and flash are much more exciting than substance," he said at Getty's presentation.

To which Getty CEO and co-founder Jonathan Klein responded, "We'll stick with assets and earnings, if you don't mind."

Getty is part of a $5 billion market of providing visual content to customers ranging from ad agencies to magazines to new media publishers. The ad industry alone generated 58% of Getty's revenue last year. Now Getty is pushing to sell its images online, hoping the move will cut costs and improve access to customers.

Sounds good, but 1999 revenue growth might not be as strong as last year. Klein expects 15% revenue growth in 1999, "with the potential for upside." Sales, including acquisitions, increased by 84% in 1998. Excluding acquisitions, sales grew 18%.

"That might not be strong enough for me," says Cern Basher, vice president of Provident Investment Advisors, who is considering an investment in Getty. Basher is also concerned about the proliferation of free images on the Internet. But he says Klein reassured investors at the breakout session that its images are protected with a watermark technology.

The stock gained 7/16 to 19 3/8 Thursday, marking a 15.5% rise since the beginning of the year.

-- Suzanne Galante

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