Profit in Motion: Tiny Sensors Take Off
Wall Street Journal -
In a small semiconductor factory in Cambridge, Mass., next to a factory that makes Junior Mints, technicians are churning out thousands of accelerometers -- tiny mechanical motion sensors that have helped turn Nintendo Co.'s Wii into the hottest videogame console.
One of the devices, each about the size of a match head, sits inside the motion-sensitive, hand-held controller that lets Wii users 'play' tennis, baseball or golf. The tiny sensors are a type of microelectromechanical system, known as 'mems' -- and they are hot products.
The Cambridge factory belongs to Analog Devices Inc., Norwood, Mass., a big maker of specialty semiconductors that says mems have grown to be 6% of its sales in the past year and are among its fastest growing product lines.
Although Analog has been making mems since 1989, the market took off when auto makers decided the tiny machines, built using semiconductor technology, were reliable enough to replace the mechanical systems used to deploy air bags. The mems market has grown steadily since. Several other companies -- including Germany's Robert Bosch GmbH; STMicroelectronics, Geneva; and Freescale Semiconductor Inc., Austin, Texas -- also make mems, primarily for automotive and industrial applications.
The market is taking off in part because low-end mems motion sensors have dropped in price to less than $2 from $20 five years ago. That opens up the market for consumer applications like videogames and cellphones.
Marlene Bourne, president of Bourne Research LLC, Scottsdale, Ariz., says inertial sensors, including accelerometers and gyroscopes, have become one of the fastest-growing segments of the mems industry, which had sales of $7.6 billion last year, and includes such products as micromachined print heads for inkjet printers. She says the inertial-sensor market had sales of $950 million last year, with unit sales up 9%.
Accelerometers, which measure motion in three dimensions, can also detect gravity, and figure out if a device is standing up or lying down. They keep the motorized Segway scooter erect and to help Sony Corp.'s toy robot dog, the Aibo, figure out when it has fallen down.
Working from inside, they detect when laptop computers have been dropped, triggering a lock that secures the hard drive before it hits the ground to protect it from damage. Some digital cameras employ mems chips to detect shakiness and compensate for blur.
Richard Mannherz, customer-marketing manager for Analog's micromachined-products division, says that 'more and more products will include inertial sensors so they'll know what to do without your telling them to.' He says that many actions that currently require a person to push a button could be accomplished automatically by a motion sensor. |
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Last week Mattel issued its fifth recall in recent months, this time for products made in Mexico. But that recall was fairly minor, and the company, known for toy classics like Barbie, Ken and the Fisher Price line, looks to have put its problems behind it.
'There's very little, if any, downside risk' to Mattel's stock, says Linda Bolton Weiser, a toy analyst at Oppenheimer. She figures the stock could rebound by 50% in the coming year, to about $30, as parents -- and investors -- regain their confidence in the El Segundo, Calif.-based company.
In an email last week, Mattel representatives said the company 'has now tested samples of the vast majority of products expected to ship for the holiday season.'
Top public-relations pro Howard Rubenstein of New York, who does not represent Mattel, credits the company with moving quickly on the recalls, apologizing and making a public commitment to safety. After studying the situation, Mr. Rubenstein concludes that the company has avoided major consumer defections so far but must avoid more recalls.
While some lawsuits are pending against Mattel, they are considered manageable, as no one has died from the products in question. These include Batman action figures, Polly Pocket and some Barbie accessories
Mattel has some 'short-term issues, but for the longer term, there's little effect' from the recalls, says Ira Carnahan, fund manager at T. Rowe Price, which has owned the stock for about a year. He figures the stock has 'very limited downside' and ample room to run. 'It doesn't need a sensational year, just a good year,' Mr. Carnahan says.
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