Background

CML Microsystems Plc was founded in 1968 by George Gurry in the United Kingdom. The corporation focus's on designing, manufacturing and marketing a range of integrated circuits for global industrial, professional and consumer applications within the areas of wireless communication, wireline communication, storage and networking. CML has been long recognised as an innovator in mixed-signal circuit design and supplier to many global leading electronic equipment manufacturers. CML operates through eight subsidiaries located in the UK, USA, Germany and Singapore. CML comprises of 4 business units, three of which are in the Semiconductor Division and one in the Equipment Division.

Company Structure

The Semiconductor Division comprises of:

• CML Microcircuits - A leader in designing, manufacturing and marketing integrated circuits for the wireless communications and wireline telecommunications industries.
  • Headquarters are located in Essex, England, with sales, marketing and technical support operations located in North Carolina, USA and Singapore.
• Hyperstone GmbH (Germany) - A fabless semiconductor company founded in 1990 and works to produce products such as flexible microprocessors and application-specific products for flash memory for both consumer and industrial Flash Card and Solid State Drive markets.
• Applied Technology (UK) Ltd - Works to providing support on semiconductor developments for the CML group. The company comprises of engineers offering skills in RF design, DSP software development and baseband processing.

The Equipment Division comprises of:

• Radio Data Technology Ltd (RDT) - Specialises in the development and marketing of wireless data and video communications products for low power licensed and unlicensed markets worldwide.

Corporate Structure

A typical corporate structure consists of a Board of Directors and a Management Team. Ideally the board should consist of a mix of internal and external board members for the interest of the shareholders. Within CML the current structure is presented by the following organisation chart:

• CML was founded by George Gurry in 1968; to this day he remains as the non-executive chairman, providing a leading role into the well-being of the company. His duties include strong communication with the managing director (Christopher Gurry) and high-level executives, formulating the company’s business strategy.

• Christopher Gurry is currently the managing director, appointed in 2007, with over 20 years' experience in the electronics industry working within communications markets. The managing director is part of the inside directors, responsible for approving high-level budgets and implementing and monitoring business strategy. Inside directors are usually shareholders or high-level management (executive directors). Christopher was appointed to the board in 2000 as business development director. Christopher is responsible for the entire operations of the company. He will report directly to the Chairman and the Board of Directors.

• Nigel Clark joined the company in 1980 was appointed company secretary in 1983 and financial director in 1985. Nigel is responsible for analysing and reviewing financial data, reporting financial performance, preparing budgets and monitoring expenditures and costs. Nigel is also part of the inside directors.

• George Bates became a non-executive director in 2006. A non-executive director is also known as an outside director. This is someone who has the same responsibilities as the inside directors, but is not part of the management, and therefore should provide and unbiased and impartial perspective on issues to the board. This is appealing to the current and future shareholders, as the decisions of the company won’t be biased by the management team.

• Ronald Shashoua joined the company in 1996. Ronald is currently a non-executive director, although he held other positions such as the corporate finance specialist as well as other management positions, including chief executive. Ronald is also part of the outside directors.

The management and board of director’s goal is to maximise shareholder value.

Business Model

CML have driven their success from profiting highly in niche markets. A niche market is a subset of the market focused on, which can be specialised or may not seem financially considerable to large corporations. CML has aimed its strategy towards two main focus areas:

• "Deliver a solution rather than merely a component product to the customer"
• "Concentrate on markets that have significant barriers to entry and have limited economic appeal to larger competitors"

Where the initial strategy was to target niche markets, the acquisition of Hyperstone has shown the strategy evolving to include higher-volume consumer and industrial markets with increased global competition.

CML has 4 main markets which it has targeted since start up and expanded into. These are:

Wireline telecoms

Data modems and telephone signalling ICs for:

• Wireless local loop / fixed wireless terminals
• Alarm status reporting
• Pay phones / feature phones
• Electronic Point of Sale (EPOS)
• Meter reading
• Telemetry

Wireless

Data modems, baseband processors, high performance RF ICs for:

• Professional radio communications (voice and data)
• Leisure radio communications (voice and data)
• Radio paging (industrial, emergency services, retail)
• Voice security (scrambling)
• Marine AIS (Automatic Identification of Ships)
• Telemetry and machine-to-machine communications

Storage solutions

Flash controller ICs for:

• Consumer memory cards (CF, SD, miniSD, microSD, MMC, RSMMC, MicroMMC ...)
• Industrial / data products (CF, SSD, DoM, DoB, proprietary...)

Networking solutions

Proprietary RISC/DSP processor ICs for:

• Industrial networking/automation (Ethernet-based communications)
• Security (IP-cameras, digital video recorders for CCTV)
• Biometrics (fingerprint recognition, access control / time and attendance logging)

These are currently all the areas of development where the company has found its market in. Although in past few years, the company has experienced significant losses and has started to look for ways to reduce costs.

Market Value

Within the past 7 years, the company has shown a great gain and loss in value varying gradually throughout the years. Between 2002 to present, the company has peaked at +64% in value and currently at a loss of -84% in value compared to how it was in 2002. The graph below shows the share values from 2002 to present.



The company to date currently has its share value at 42.00p. This is a dramatic drop from 2004 where it peaked at 415.00p per share. This demonstrates that the current niche markets which the company had targeted have currently failed to provide opportunity for growth and high profitability.

The current market value for the company is calculated by taking the product of the current share value and the total number of shares issued to date.

Over the past year the market value has dropped by as much as 50%, showing that the company is either not providing quality service/products or that the demand for the service/products in the targeted niche markets have decreased considerably. The company will need to either look into other areas for R&D, or find ways to cut costs. This day and age the economic recession has taken a vital role into decreasing the market value of many companies, but as the graph below proves, CML has had a steady decrease in value for the past 3 years at a greater rate than the FTSE 100, showing that the economic recession is not the only player in the company’s degradation.

Bibliography

CML Microsystems Plc (2009). Company Overview. Retrieved April 05, 2009, from
http://www.cmlmicroplc.com/cml/company/overview/
CML Microsystems Plc (2009). Management Overview. Retrieved April 05, 2009, from
http://www.cmlmicroplc.com/cml/management/director/
Digital Look Ltd (2009). CML Share Prices. Retrieved April 05, 2009, from
http://www.digitallook.com/companyresearch/11371/CML_Microsystems/share_prices.html
CML Microsystems Plc (2009). CML Shares Graphs. Retrieved April 05, 2009, from
http://www.cmlmicroplc.com/cml/financial_information/share_chart/
EETimes UK (2008). Losses widen at CML Microsystems. Retrieved April 05, 2009, from
http://eetimes.eu/uk/212200303