In Memory of a Fallen CEO and an Overlooked Tech Company

TheStreet.com

Editor's note: One day before we remember our veterans who have died to protect our freedom, we pay homage to a few business leaders who have recently passed away.

NEW YORK (TheStreet) -- As the U.S. prepares to honor men and women who died while serving in the military, I want to pay my deepest respect to their memory and to their loved ones.

Originally known as Decoration Day, Memorial Day originated in the years following the Civil War and became an official, very significant federal holiday in 1971.

Speaking of those who have departed, this article remembers a prescient, hard-working, smart man who helped to develop a technology company that today has a market cap of almost $14 billion. He still is an example to me of how working smarter and harder can help transform a business.

Jerry Fishman, the CEO of Analog Devices died on March 28, 2013 after an apparent heart attack. He was 67 years old, and had been the longest tenured executive manager of any semiconductor company in history.

Fishman became president and chief operating officer of ADI in 1991. He was promoted to CEO in 1996 when Ray Stata stepped down. His career was widely heralded, and although I never met the man I too felt the "sting" that followed his passing. No other colleague felt it more deeply than Ray Stata.

"This is a terrible loss for me personally and for all of us here at ADI," said Ray Stata, chairman of ADI, board of directors, in a statement. "Jerry dedicated his entire career to building ADI into a great company -- one of which we all are enormously proud." Stata knew him intimately and had been responsible for choosing and promoting Fishman to lead ADI.


Jerry Fishman was born in 1945 and grew up in Flushing, N.Y. He graduated from the City College of New York with a Bachelor of Science degree in electrical engineering and went on to earn a Master of Science degree in electrical engineering from Northeastern University. This high achiever also earned a Master of Business Administration degree from Boston University, and a law degree from Suffolk Law School.

With a great enthusiasm to apply all he'd learned Fishman joined ADI in 1971, barely 26 years old. There he worked his way up through the company, learning its goals, products and envisioning how he might help lead ADI to higher levels of success and achievement.

When I visited ADI's historically focused Web site, I was both educated and impressed by its interactive timeline of the company's evolution. It's well worth the time to learn how a great company creates a culture that breeds a positive working environment and outstanding financial results.

By the 30th anniversary of Analog Devices in 1995, ADI rose to be included in Business Week magazines' list of the 500 most valuable companies in America. The next year, 1996 saw ADI's total sales top $1.1 billion and in November 1996, Jerry Fishman was named president and CEO.

From the start, Fishman's leadership helped insure that ADI would make the full transition to being a company that defines innovation and excellence in signal processing. ADI's analog, mixed-signal, and digital signal processing (DSP) integrated circuits (IC) play a fundamental role in converting, conditioning and processing real-world phenomena such as light, sound, temperature, motion and pressure into electrical signals to be used in a wide array of electronic equipment.


With Stata as the Chairman of ADI and Fishman as CEO, ADI emerged as one of the most employee-friendly and customer-centric tech companies on earth. In the company's own words:

"At ADI, we believe that our employees are not only our greatest asset, but also a great asset for our customers.
"Our people relish the opportunity to delve into and solve challenging technical problems, and our customers rely on ADI's exceptional engineering talent as they design and produce their own products. Our engineers continually push the technological edge, adding to and supporting our diverse product portfolio to meet our customers' broad spectrum of high-performance signal processing needs."

From a customers' perspective you've got to be happy with a provider that strives to reduce your overall system costs. The company writes:

"We define innovation as a solution that helps make our customers' products successful. We commit a significant percent of our profits to engineering and customer service, to foster the development of signal processing technology our customers can use to design products that stand out against competitors', with features that enhance the user experience."

The value ADI customers place on its signal-processing innovations is clearly reflected in the growing profits ADI earns. The company's ongoing intentions have been to take those profits and reinvest them into more engineering and customer services, allowing the virtuous cycle of innovation to continue.


Allow this five-year chart to illustrate the ongoing profitability of Analog Devices that derives from its outstanding corporate principles built on the legacy of the late Jerry Fishman. It serves to help us understand why ADI offers a sustainable dividend of close to 3%.

ADI Chart
ADI data by YCharts

With a trailing 12-month (TTM) operating margin of more than 30% and profit margin of 24%, ADI has been able to generate annual revenue of $2.68 billion (TTM). In its most recent quarter (ended Feb. 2, 2013) it reported total cash of $4 billion.

During the earnings conference call CFO David Zinser was asked a question about the company's dividend policies. He answered:

"We drive dividend based on looking at our earnings and giving out a percentage of those earnings in the form of a dividend. It just so happens that it translates into this 3% yield, although we're mindful of it. It's certainly something that we pay attention to, but it isn't the major driver of how we drive the dividend."

Speaking on behalf of ADI, Zinser explained:

"Our goal is that the dividend is our primary means of returning cash to shareholders. We want it to continue. We want it to grow as earnings grow and we look at the stock buyback as more of our opportunistic opportunities to enhance the cash going back to shareholders, albeit at different intervals depending on the stock price relative to kind of historical levels."

Vincent Roche assumed Fishman's former roles as President and CEO. Roche commented on the above explanation by revealing how the Analog Devices is poised to grow earnings and remain competitive:

"To add a little color to what David said, we're in the transition between 3G and 4G and wireless infrastructure and as that gains pace, we're very well-positioned as a company with good market share, a lot of good design coverage and extra build materials value in 4G compared to 3G."

Roche went on to say:

"So, as that starts to gather steam, which we hope is sometime in the second half of the year, albeit, so far the carriers have been fairly skittish, but somewhere we believe in the fourth quarter and to the early part of the coming year we do expect to see the carrier start to accelerate the build out of their networks in terms of capacity rather than coverage. So I think that will help the margin structures and the growth overall for the company."

If Jerry Fishman were somehow listening in, I'd imagine him smiling from ear to ear. His legacy continues and ADI will strive to live up to its intentions for a bright future. On the company Web site, I found these words that echo the attitude and spirit that Fishman infused into ADI for the almost 22 years of his leadership:

"Despite our great history, we are confident that the best years for our company lie before us. We will continue to build upon ADI's traditions of innovation, performance, and excellence to forge ahead and to conquer new technological frontiers. We invite each of you, whether you are a shareholder, a customer or one of our talented employees, to join us on our exciting journey."

Disclosure: At the time of publication the author is not long nor short any of the companies mentioned in this article.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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