netrashetty
Netra Shetty
Silicon Image is an American semiconductor design company. The company manufactures a variety of integrated circuits commonly used in modern computers and consumer electronic devices, but is focused on storage, distribution and presentation of high-definition content in the consumer electronics, personal computing, and mobile device markets. The company was founded in 1995, and is traded on the NASDAQ market under the symbol SIMG. The company, which employs around 600 people, is headquartered in Sunnyvale, California.
Simplay Labs, LLC, a wholly-owned subsidiary of Silicon Image, offers testing tools, technologies, support services, consulting and product certification to electronics manufacturers to increase performance, interoperability and ensure quality.
The company's products include high-speed communications devices for use in DVI capable displays and PCs, HDMI set-top boxes, DVD players, AV receivers, displays, PCs and mobile devices; and SATA chipsets for internal and external hard disk drives.
Sigma-Aldrich Corp. (NASDAQ: SIAL) sells over 100,000 chemicals, 46,000 of which it manufactures internally.[1] Most of the company's 80,000 customers[2] are scientific research institutions that purchase basic lab chemicals. However, the company also sells chemicals in large quantities to pharmaceutical companies who use them to manufacture drugs on a large scale. No single account provided more than 2% of Sigma-Aldrich's total sales in 2007.[3].
Many of S-A’s products are generic and available from many competing firms. Sigma-Aldrich differentiates itself from its competitors with its same-day shipping policy. 95% of all Research-segment orders are shipped the same day they are received[4] and the company reports a backlog of less than 2%. [5] This policy comes at the cost, however, of larger-than-normal inventories; S-A reported 2007 inventories valued at 32% of yearly revenue, compared to the industry average of about 16%. [6] [7] High inventories can sometimes prove problematic in hard economic times because they reduce the company's cash-on-hand, though Sigma-Aldrich reported no problems with liquidity in 2007.
Business Description and Financials
Income Statement for FY 2005-2007
[8]
[9] 2005 2006 2007
Net Sales $1,666.5 $1,797.5 $2, 038.7
Cost Of Products Sold $818 $877.3 $1,002.70
Gross Profit $848.5 $920.2 $1,036.0
Selling, general and administrative expenses $437.3 $464.6 $517.1
Research and Development Costs $49.8 $52.9 $59.3
Interest, net $18.1 $24 $22
Income Taxes $85 $101.9 $126.5
Net Income $258.3 $276.8 $311.1
Contents
1 Business Description and Financials
1.1 Income Statement for FY 2005-2007
1.2 Total Sales Breakdown by Business Unit
1.2.1 Geographic Revenue Origination
2 Trends and Forces
2.1 Variable Government Funding for Research
2.2 Continued Profitability of Prescription Drugs
2.3 The Dollar's Performance against Foreign Currency
3 Competition
4 References
Sigma-Aldrich has four business units each catering to a separate class of customer and product.
Research Essentials (19% of total sales in 2007) sells common lab chemicals and supplies such as biological buffers, cell culture reagents, biochemicals, solvents, reagents and other lab kits to customers in all sectors. [10]
Research Specialties (37% of total sales) sells organic chemicals, biochemicals, analytical reagents, chromatography consumables, reference materials and high-purity products.[11]
Research Biochemicals (15% of total sales) provides "first to market products" to high end biotech labs,[12] selling immunochemical, molecular biology, cell signaling and neuroscience biochemicals.[13]
Fine Chemicals (SAFC) (29% of total sales) fills large-scale orders of organic chemicals and biochemicals used for production in the pharmaceutical, biotechnology, and the high-tech electronics industry.[14]
Total Sales Breakdown by Business Unit
(In millions of dollars)
[15]
[16] 2005 2006 2007
Research Essentials $341.00 $355.30 $388.00
Research Specialties $626.20 $669.70 $760.90
Research Biotechnology $262.00 $276.80 $299.30
Fine Chemicals (SAFC) $437.30 $495.70 $590.50
Sigma-Aldrich has seen sales growth across all business units as it continues to expand its international presence in Europe, Asia, and Latin America. With the acquisition of British chemical supplier Epichem in 2007, the company's industrial supply unit SAFC posted double digit revenue growth in Europe and the aggregated region it calls CAPLA (Canada, Asia-Pacific, and Latin America.) [17] In September 2007, the company announced it is building a new manufacturing hub just northwest of Shanghai, China, to support the growth of its SAFC unit in the region. This move is consistent with CEO Jai Nagarkatti's goal that 25% of S-A's total revenue would come from sales in CAPLA by 2010.[18] 2007 sales revenue in the Research Specialties unit also grew by double digits (13.6%) due to an uptick in orders from pharmaceutical and academic labs in the US, Europe and CAPLA.
Geographic Revenue Origination
Sigma-Aldrich organizes its sales data geographically based upon the location from which the order shipped. More specific data on international shipments are not made available to the public.
[19]
Net Sales to Unaffiliated Customers
[20] 2005 2006 2007
United States $681.8 $715.4 $756.3
United Kingdom $184.6 $187.6 $212.7
Other International $800.1 $894.5 $1,069.7
Total $1,666.5 $1,797.5 $2,038.7
Trends and Forces
Variable Government Funding for Research
Nearly 71% of Sigma-Aldrich's total sales revenue comes from small to medium-scale orders from biotechnology research labs in universities, hospitals, and independent facilities.[21] Many of these organizations rely on government grants for funding and support for their research. The level of government funding for these entities varies from year to year, however, depending on tax revenue, pressing expenditures on the military and social relief programs, the party in power, and public support for research programs. This volatility can have a positive or negative effect on research laboratories' funding and, by extension, their ability to make new purchases from Sigma-Aldrich. While the company is somewhat insulated from this volatility by the breadth of its laboratory customer base and its sales relationships with larger, non-government manufacturers, an across-the-board cut in government research spending would have a definite negative impact on the company's overall sales. The United States Office of Management and Budget (OMB) has released the president's proposed budget for 2009. In it, the president proposes increasing the research budget of the National Science Foundation (the agency responsible for a large percentage of the government's research grants) by 16% in 2009 to a total of $5.59 Billion. The NSF's research budget for 2008 stands at $4.8 Billion, up 2.8% from 2007. [22]
Continued Profitability of Prescription Drugs
In 2007, 36% of Sigma-Aldrich's total sales came from the pharmaceutical and biotechnology companies alone (not including university and government supported labs).[23] While large-scale chemical orders for scaled-up drug manufacturing account for much of SAFC's sales, pharmaceutical companies' research and development departments make purchases across S-A's three Research business units as well. As a percentage of total costs, R&D expenditures across the Pharmaceutical industry were five times the average in other manufacturing industries.[24] In 2003 alone, US Pharmaceutical companies spent over $17 Billion researching and developing new drugs. [25] R&D spending, however, depends heavily on the continued profitability of new drugs. If the economic returns from new drug production decreases, R&D expenditures on those drugs will diminish or disappear altogether. Such a reduction in expenditures would have a negative effect on sales growth across all of Sigma-Aldrich's Research business units.
The Dollar's Performance against Foreign Currency
As with any global corporation, much of Sigma-Aldrich's revenue is affected by fluctuations on the international capital markets. In 2007, a full 60% of the company's total sales came from outside of the United States.[26] Many of these sales were conducted in currencies other than dollars and the resulting exchange into dollars alone accounted for a 4.8% increase in the dollar value of sales in 2007. This was up significantly from the corresponding sales boost in 2006 of 0.4%. [27] Though some of this increase has resulted simply from a higher percentage of total sales being made in foreign currencies, it can also be attributed to the consistent decline of the dollar against many of the other world currencies.
Competition
Primary competitors by business unit:
Research Essentials shares the market for common lab reagents and equipment with Invitrogen (IVGN), Thermo Fisher Scientific (TMO), and VWR Industries.
Research Specialties competes with GE Healthcare and Thermo Fisher Scientific (TMO) in the market for specialized analytical reagents and high-purity products.
Research Biotech encounters competition in the specialized biochemical sector from Applied Biosystems (acquired by Invitrogen in 2008), GE Healthcare, Invitrogen (IVGN), Millipore (MIL), and Qiagen N.V. (QGEN).
SAFC faces competition from BASF SE (BASFY), Covidien Ltd (COV), Koninklijke DSM N.V. (RDSMY), Evonik Degussa Corp., and Lonza Group for large-scale chemical orders from high-tech electronics and pharmaceutical manufacturers.
2007 Total Revenue (In Millions) % Revenue Growth in 2007 2007 R&D Spending as % of Total Revenue Value of 2007 Inventories as % of Total Revenue
Sigma-Aldrich (SIAL)[28] $2,038.70 13.40% 2.91% 32%
Invitrogen (IVGN)[29] $1,281.75 11.34% 9.04% 13%
Thermo Fisher Scientific (TMO)[30] $9,746.40 9.88% 2.45% 12%
VWR International N/A N/A N/A N/A
GE Healthcare[31] $16,997.00 2.64% N/A N/A
Applied Biosystems (Acquired by Invitrogen (IVGN) in 2008)[32] $2,093.47 9.54% 9.74% 6%
Millipore (MIL)[33] $1,531.56 22.00% 6.99% 18%
Qiagen N.V. (QGEN)[34] $649.77 39.50% 9.99% 14%
BASF SE (BASFY)[35] € 52,610.00 23.07% 2.43% 13%
Covidien Ltd. (COV)[36] $10,170.00 5.42% 2.69% 13%
Koninklijke DSM N.V. (RDSMY)[37][38] € 8,921.00 2.95% N/A 17%
Evonik Degussa Corp [39] € 14,430.00 2.16% N/A 12%
Lonza Group [40] CHF 2,870.00 -1.51% 3.10% 23%
Simplay Labs, LLC, a wholly-owned subsidiary of Silicon Image, offers testing tools, technologies, support services, consulting and product certification to electronics manufacturers to increase performance, interoperability and ensure quality.
The company's products include high-speed communications devices for use in DVI capable displays and PCs, HDMI set-top boxes, DVD players, AV receivers, displays, PCs and mobile devices; and SATA chipsets for internal and external hard disk drives.
Sigma-Aldrich Corp. (NASDAQ: SIAL) sells over 100,000 chemicals, 46,000 of which it manufactures internally.[1] Most of the company's 80,000 customers[2] are scientific research institutions that purchase basic lab chemicals. However, the company also sells chemicals in large quantities to pharmaceutical companies who use them to manufacture drugs on a large scale. No single account provided more than 2% of Sigma-Aldrich's total sales in 2007.[3].
Many of S-A’s products are generic and available from many competing firms. Sigma-Aldrich differentiates itself from its competitors with its same-day shipping policy. 95% of all Research-segment orders are shipped the same day they are received[4] and the company reports a backlog of less than 2%. [5] This policy comes at the cost, however, of larger-than-normal inventories; S-A reported 2007 inventories valued at 32% of yearly revenue, compared to the industry average of about 16%. [6] [7] High inventories can sometimes prove problematic in hard economic times because they reduce the company's cash-on-hand, though Sigma-Aldrich reported no problems with liquidity in 2007.
Business Description and Financials
Income Statement for FY 2005-2007
[8]
[9] 2005 2006 2007
Net Sales $1,666.5 $1,797.5 $2, 038.7
Cost Of Products Sold $818 $877.3 $1,002.70
Gross Profit $848.5 $920.2 $1,036.0
Selling, general and administrative expenses $437.3 $464.6 $517.1
Research and Development Costs $49.8 $52.9 $59.3
Interest, net $18.1 $24 $22
Income Taxes $85 $101.9 $126.5
Net Income $258.3 $276.8 $311.1
Contents
1 Business Description and Financials
1.1 Income Statement for FY 2005-2007
1.2 Total Sales Breakdown by Business Unit
1.2.1 Geographic Revenue Origination
2 Trends and Forces
2.1 Variable Government Funding for Research
2.2 Continued Profitability of Prescription Drugs
2.3 The Dollar's Performance against Foreign Currency
3 Competition
4 References
Sigma-Aldrich has four business units each catering to a separate class of customer and product.
Research Essentials (19% of total sales in 2007) sells common lab chemicals and supplies such as biological buffers, cell culture reagents, biochemicals, solvents, reagents and other lab kits to customers in all sectors. [10]
Research Specialties (37% of total sales) sells organic chemicals, biochemicals, analytical reagents, chromatography consumables, reference materials and high-purity products.[11]
Research Biochemicals (15% of total sales) provides "first to market products" to high end biotech labs,[12] selling immunochemical, molecular biology, cell signaling and neuroscience biochemicals.[13]
Fine Chemicals (SAFC) (29% of total sales) fills large-scale orders of organic chemicals and biochemicals used for production in the pharmaceutical, biotechnology, and the high-tech electronics industry.[14]
Total Sales Breakdown by Business Unit
(In millions of dollars)
[15]
[16] 2005 2006 2007
Research Essentials $341.00 $355.30 $388.00
Research Specialties $626.20 $669.70 $760.90
Research Biotechnology $262.00 $276.80 $299.30
Fine Chemicals (SAFC) $437.30 $495.70 $590.50
Sigma-Aldrich has seen sales growth across all business units as it continues to expand its international presence in Europe, Asia, and Latin America. With the acquisition of British chemical supplier Epichem in 2007, the company's industrial supply unit SAFC posted double digit revenue growth in Europe and the aggregated region it calls CAPLA (Canada, Asia-Pacific, and Latin America.) [17] In September 2007, the company announced it is building a new manufacturing hub just northwest of Shanghai, China, to support the growth of its SAFC unit in the region. This move is consistent with CEO Jai Nagarkatti's goal that 25% of S-A's total revenue would come from sales in CAPLA by 2010.[18] 2007 sales revenue in the Research Specialties unit also grew by double digits (13.6%) due to an uptick in orders from pharmaceutical and academic labs in the US, Europe and CAPLA.
Geographic Revenue Origination
Sigma-Aldrich organizes its sales data geographically based upon the location from which the order shipped. More specific data on international shipments are not made available to the public.
[19]
Net Sales to Unaffiliated Customers
[20] 2005 2006 2007
United States $681.8 $715.4 $756.3
United Kingdom $184.6 $187.6 $212.7
Other International $800.1 $894.5 $1,069.7
Total $1,666.5 $1,797.5 $2,038.7
Trends and Forces
Variable Government Funding for Research
Nearly 71% of Sigma-Aldrich's total sales revenue comes from small to medium-scale orders from biotechnology research labs in universities, hospitals, and independent facilities.[21] Many of these organizations rely on government grants for funding and support for their research. The level of government funding for these entities varies from year to year, however, depending on tax revenue, pressing expenditures on the military and social relief programs, the party in power, and public support for research programs. This volatility can have a positive or negative effect on research laboratories' funding and, by extension, their ability to make new purchases from Sigma-Aldrich. While the company is somewhat insulated from this volatility by the breadth of its laboratory customer base and its sales relationships with larger, non-government manufacturers, an across-the-board cut in government research spending would have a definite negative impact on the company's overall sales. The United States Office of Management and Budget (OMB) has released the president's proposed budget for 2009. In it, the president proposes increasing the research budget of the National Science Foundation (the agency responsible for a large percentage of the government's research grants) by 16% in 2009 to a total of $5.59 Billion. The NSF's research budget for 2008 stands at $4.8 Billion, up 2.8% from 2007. [22]
Continued Profitability of Prescription Drugs
In 2007, 36% of Sigma-Aldrich's total sales came from the pharmaceutical and biotechnology companies alone (not including university and government supported labs).[23] While large-scale chemical orders for scaled-up drug manufacturing account for much of SAFC's sales, pharmaceutical companies' research and development departments make purchases across S-A's three Research business units as well. As a percentage of total costs, R&D expenditures across the Pharmaceutical industry were five times the average in other manufacturing industries.[24] In 2003 alone, US Pharmaceutical companies spent over $17 Billion researching and developing new drugs. [25] R&D spending, however, depends heavily on the continued profitability of new drugs. If the economic returns from new drug production decreases, R&D expenditures on those drugs will diminish or disappear altogether. Such a reduction in expenditures would have a negative effect on sales growth across all of Sigma-Aldrich's Research business units.
The Dollar's Performance against Foreign Currency
As with any global corporation, much of Sigma-Aldrich's revenue is affected by fluctuations on the international capital markets. In 2007, a full 60% of the company's total sales came from outside of the United States.[26] Many of these sales were conducted in currencies other than dollars and the resulting exchange into dollars alone accounted for a 4.8% increase in the dollar value of sales in 2007. This was up significantly from the corresponding sales boost in 2006 of 0.4%. [27] Though some of this increase has resulted simply from a higher percentage of total sales being made in foreign currencies, it can also be attributed to the consistent decline of the dollar against many of the other world currencies.
Competition
Primary competitors by business unit:
Research Essentials shares the market for common lab reagents and equipment with Invitrogen (IVGN), Thermo Fisher Scientific (TMO), and VWR Industries.
Research Specialties competes with GE Healthcare and Thermo Fisher Scientific (TMO) in the market for specialized analytical reagents and high-purity products.
Research Biotech encounters competition in the specialized biochemical sector from Applied Biosystems (acquired by Invitrogen in 2008), GE Healthcare, Invitrogen (IVGN), Millipore (MIL), and Qiagen N.V. (QGEN).
SAFC faces competition from BASF SE (BASFY), Covidien Ltd (COV), Koninklijke DSM N.V. (RDSMY), Evonik Degussa Corp., and Lonza Group for large-scale chemical orders from high-tech electronics and pharmaceutical manufacturers.
2007 Total Revenue (In Millions) % Revenue Growth in 2007 2007 R&D Spending as % of Total Revenue Value of 2007 Inventories as % of Total Revenue
Sigma-Aldrich (SIAL)[28] $2,038.70 13.40% 2.91% 32%
Invitrogen (IVGN)[29] $1,281.75 11.34% 9.04% 13%
Thermo Fisher Scientific (TMO)[30] $9,746.40 9.88% 2.45% 12%
VWR International N/A N/A N/A N/A
GE Healthcare[31] $16,997.00 2.64% N/A N/A
Applied Biosystems (Acquired by Invitrogen (IVGN) in 2008)[32] $2,093.47 9.54% 9.74% 6%
Millipore (MIL)[33] $1,531.56 22.00% 6.99% 18%
Qiagen N.V. (QGEN)[34] $649.77 39.50% 9.99% 14%
BASF SE (BASFY)[35] € 52,610.00 23.07% 2.43% 13%
Covidien Ltd. (COV)[36] $10,170.00 5.42% 2.69% 13%
Koninklijke DSM N.V. (RDSMY)[37][38] € 8,921.00 2.95% N/A 17%
Evonik Degussa Corp [39] € 14,430.00 2.16% N/A 12%
Lonza Group [40] CHF 2,870.00 -1.51% 3.10% 23%