Two years ago, I wrote about Jim Anderson’s first birthday as CEO of Lattice Semiconductor. Anderson joined Lattice after a long career as a senior semiconductor executive, including at AMD and Intel. A lot has changed at Lattice Semiconductor since then, so I thought this would be a great time to re-analyze Jim Anderson’s performance as CEO. During my days as a “big tech” executive, I remember getting a lot of performance reviews from CEOs, so it’s always fun to be on the other side of the coin.
Lattice Semiconductor may not be the company that all consumers know and follow closely, but the company is important to the industry and I have been researching it for 36 months. The company has gone through quite a financial and product transformation; I would say a lot of that is a result of the new team being led by Jim Anderson versus a sector game. Lattice is focused on programmable, low-power leadership, and it took a reimagined roadmap and product strategy to achieve that goal.
In 2018, when Jim Anderson became CEO of Lattice, the company had to focus more on its core markets. This meant doubling the number of critical markets such as AI, 5G, edge, data centers, robotics and security and creating comprehensive solutions to meet these markets. Lattice quickly got to work on the hardware and software side. It launched several families of new low power FPGAs, including CrossLink-NX, Certus-NX, Mach-NX and CertusPro-NX, in addition to new application-specific software solution stacks for on-board vision and security, in less than two year window. The real point of differentiation here is that Lattice’s Nexus-based FPGAs are up to 4 times more power efficient than competing offerings. I haven’t performed these tests myself, but believe they are accurate. Jim Anderson has made the company’s wheelhouse extremely fuel efficient. And I also appreciate that he has become aggressive on competitive positioning.
In 2019, after a year in the hot seat, he presented a new business strategy that would be the metric we should use to judge Lattice over the next two years. Driving product leadership and creating shareholder value were two categories the company had focused on in 2019. From a product perspective, the company wanted to accelerate the pace of its products, rebuild competitiveness, launch new new software solutions, execute product launch milestones on time. , and accelerate the time to market for customers.
Under the revamped leadership team, Lattice has built the strongest business product portfolio I have ever seen from the company. He also did it at 3 times the pace of previous launches. Lattice has also focused on creating complete solution stacks that include hardware and software instead of just focusing on silicon. The full solution stack strategy allows the business to focus on fewer product lines while creating more robust end-to-end solutions that are more valuable to customers and, in turn, more profitable. It also speeds up time to market, as customers have to do less work to adopt Lattice technology in their designs, and removes potential objections from the FPGA to the ASIC or controller, which I consider its real competition.
Looking at Lattice’s 2019 metrics in 2021, the results are final. The company has delivered on almost all of these promises and has excellent financial results and competitive products to show. Jim made sure that his famous “say-do” remained largely intact.
I’m an industry analyst, not a financial analyst, so I usually leave the financial work to financial analysts. My focus is more on the product strategy that has enabled the company to achieve good financial results. I have been saying this for years, and it remains true, you cannot judge a company solely on its bottom line. But financial growth is a good indicator of short-term success and confidence in long-term business strategy. It takes a lot of operational discipline to achieve good results that generate significant shareholder value. Of course, investors care deeply about profitability, cash flow, and EPS. Jim Anderson and the team have made Lattice more competitive in the market and have been exceptionally successful in strengthening the balance sheet. Let’s take a look at where Lattice was when Jim Anderson took over and the results he has helped produce since then.
On August 27, 2018, the day before Anderson was appointed CEO, Lattice’s stock was $ 7.55. Three years later, the stock is at $ 63.43. These price changes represent an increase of 740% in just over three years. Not too bad in my book. Several other financial measures help paint the big picture. To name a few, Lattice now has an EPS run rate of $ 1 and a gross margin increase of 500 basis points since 2018.
I attended Lattice Analyst Day 2021, where the company showcased new products and increased financial advice. You can read the full article here. In its latest financial results, Lattice reported 25% year-on-year revenue growth, 29.1% operating profit and double-digit year-on-year growth in the communications, IT, industry and automotive. Longer term, Lattice Semiconductor wants to aim for double-digit revenue growth, achieve gross margins> 65%, maintain OPEXs at 35% and achieve an operating profit target> 30%. These goals are ambitious, but I’ve learned that Jim Anderson and the team are willing to work to make them a reality. I believe Anderson is also careful about finances.
I don’t want to beat a dead horse with finances, but Lattice’s performance has been impressive over the past three years. I know these results are not due to a singular number, but the business execution that led to these results occurred with Jim Anderson at the helm. Lattice Semiconductor is poised for more growth, and the business should strike while the iron is hot.
When Lattice hired Jim Anderson as CEO in 2018, I was very optimistic that Lattice would be better off for it. Three years later, I can definitely say that the company made the right decision. A strengthened product portfolio, deeper customer relationships and a complete boom in the company’s finances are all significant indicators that Jim Anderson was the right fit for the job. I understand that my analysis of Anderson’s performance is exceptionally positive, but I struggled to find many reasons to criticize his performance. I’m sure some will find ways to disagree.
Based on the first three years of his tenure, I believe the future of Lattice Semiconductor is bright under the leadership of Jim Anderson. The company is well positioned to maintain its product leadership in low power programmable FPGAs and as it enters the high performance FPGA segment it will challenge Intel’s Altera group even more. and Xilinx, as these competitors focus on powering FPGAs. It will take a lot of work to keep up the pace set in Jim Anderson’s first three years, but I think Anderson and the team are up to the task. I look forward to seeing what Lattice Semiconductor can accomplish if the company continues to perform.
Note: The editors and editors of Moor Insights & Strategy may have contributed to this article.
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