Member Insights

The Challenge:

The case at hand was brought to a recent Alliance meeting by an Alliance CEO who believed his company's stock price was extremely undervalued because of past missteps by prior management. Here's what Israel Niv, CEO of DCG Systems, Inc., a leading supplier of semiconductor diagnostic, characterization and defect localization solutions, shared with the Alliance member.

If you were in this situation, what would you do?

If my industry is not favored by Wall Street, I would reposition the company as a player in my most profitable sector by creating a fuller solution.

As I understand it, your company's technology is not considered to be in a particularly high growth area. In my opinion, this affects how your company is being perceived by investors and by the market. It is difficult to change this perception, but it can be done.

For example, my semiconductor equipment had struggled with the same challenge. Most of the multipliers in that business are not that high and there are a lot of ups and downs. We decided to go after the laboratory instrumentation business. The margins are just OK, but the profits are more stable and there is much more potential for growth. This changed how we were seen in the marketplace.

If your company were my company, I would consider taking "my" technology and creating a specific application that is considered to be a high growth area. Even if the new application I chose did not generate significant volume right away, my company would no longer be identified as doing just one thing. Also, when companies move into a new business area, different analysts will begin covering them, and they will start attracting more attention for having a broader set of business and potentially more multipliers to their business.

If my industry is not favored by Wall Street, I would reposition the company as a player in my most profitable sector by creating a fuller solution. This may require an acquisition or two, but it would change the way my company is perceived, and as a result, its potential for future growth and profits.