Six years ago, Jerry Fitch, a onetime airport management executive, joined TDK Semiconductor Corp. as chief financial officer to prepare the Irvine chipmaker for a public offering.
Then the technology bubble burst.
The downturn bled the company of millions in sales and profits, derailing hopes for a spinoff from Japan’s TDK Corp.
By 2005, TDK executives sold the business to San Francisco-based investment firm Golden Gate Capital.
Fitch, who had been rising through the ranks, took on the job of chief executive, hoping to boost the company by tightening up operations, pursuing niches and being more nimble.
It seems to have worked.
In Fitch’s first year, what’s now Teridian Semiconductor Corp. saw sales double and profits return. He got the company out of businesses that would never fly, cut workers and focused on chips that help secure network connections and automate power meters.
Now Fitch’s hoping to see 50% annual growth in sales during the next few years.
“We’re remaking the business,”he said. “We recognized that we can’t compete against some of the larger semiconductor companies.”
Teridian did about $50 million in sales for the 12 months ended April 1, up from about $25 million in the year-ago period.
The company has added to its work force for the first time since 2000 with 15 hires since the last round of cuts in early 2005. It now employs around 100.
Teridian still has a way to go in its comeback. When Fitch arrived in 2000, the chipmaker had 250 workers and yearly sales of $130 million.
Fitch’s background isn’t in chips.
Before coming to TDK, he was chief financial officer at Glendale-based Airport Group International, which manages airports around the world. The GE Capital Corp.-backed company was sold for $300 million in 1999.
“They were looking for someone with a different perspective on how to run the business,” Fitch said of TDK.
At the time, the company was losing workers to bigger rivals such as Irvine’s Broadcom Corp., which could offer that most popular of compensation in the tech bubble days’ stock options.
That prompted TDK to seek a public spinoff from its Japanese parent. The plan faded after sales dropped by half from 2001 to 2002.
Fitch said TDK had the wrong game plan for survival.
He said it threw money at chip projects, hoping that it could break into sexy and lucrative markets, such as chips for wireless local area networks and global positioning systems.
But the company never could sway enough customers to switch from bigger competitors such as PMC-Sierra Inc. of Santa Clara.
The company spent millions on research and development on chips that didn’t pan out, Fitch estimated.
TDK didn’t have enough software engineers and expertise, he said.
“We didn’t have the portfolio of products,” Fitch said. “We just went into markets we shouldn’t have been in.”
Fitch became chief operating officer in 2004. Starting in 2003, the company started looking at markets that since have panned out, he said.
By 2004, TDK started seeking a buyer and found Golden Gate.
Fitch took a small stake in the company that became Teridian as part of the acquisition, which also made him chief executive.
One of his first actions was to lay off 35 workers to match the company’s smaller size and get it back in the black. Teridian was profitable in a matter of months, he said.
Fitch said he’s tried to make Teridian more nimble, identifying markets and then ramping up quickly to meet demand.
Now Teridian is in markets that don’t always have the spotlight but have potential.
One of them: selling chips for smart cards. They go in satellite TV boxes and have sold well in Europe where people use them for banking and ensuring secure access to data over the Internet.
Jim Feldhan, an analyst with Phoenix-based Semico Research Corp., said the market has potential.
“That’s actually a pretty interesting idea,” he said.
Another market: energy and automation.
Chips run the next generation of high-tech meters for tracking power use at homes. Teridian has contracts in India, Britain and South Africa. Teridian’s chips help the meters communicate directly with the central office via power lines.
This idea has taken off in Europe and Asia. It’s been more slowly embraced here.
That could change with rising energy costs, according to Feldhan.
The third major Teridian business is chips for networking. Some of its old modem chips still compete with Conexant Systems Inc. of Newport Beach.
Some of Teridian’s networking chips are more cutting-edge. Fitch said he has hopes for some of the company’s networking chips that will help connect computers and other consumer electronics in the home.
Bigger companies such as Broadcom already dominate what’s dubbed the digital home.
“It’s going to be a competitive market,” Feldhan said.
Teridian is careful about picking its battles, Fitch said.
“We work really hard on the business justification,” he said.
