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Business Overview
Synaptics (Nasdaq:SYNA) is a leading worldwide developer of custom-designed user interface solutions for mobile computing, communications and entertainment devices. Synaptics products emphasize ease of use, small size, low power consumption, advanced functionality, durability and reliability, making them applicable to a multitude of markets, including notebook computers, PC peripherals, mobile phones, and portable entertainment devices such as MP3 players.[1]
Synaptics makes user interface solutions. User interface solutions are parts of electronics that allow the user to interact with the device. They make touchpads for laptop computers, touch screens for smart phones, as well as other products.
Synaptics has two business segments, Personal Computer and Digital Lifestyle Products. The PC segment is made up of multimedia displays such as lights and buttons on computers. It also includes peripherals such as mice and keyboards. This segment also contains touchpads and other solutions for laptops. Management expects most of the growth of the PC segment to come from the growth in laptop solutions. Industry projections for 2008-2012 show expected growth in notebooks of 18.1% compared to just 3.6% for desktops. Synaptics notebook product mix allows them to access 100% of that market.
The Digital Lifestyle Products segment is made up of solutions for mobile devices, such as MP3 players, smartphones, remote controls, GPS devices. Some of the products in the segment allow users to scroll on their MP3 players, press buttons using their touch sensitive buttons, or use fingers to navigate the screen on touch screen phones. Growth in the segment will be dependent on demand for mobile devices. Overall projections for the mobile phone market show a rate of 9% through 2011. The projected growth over the same period for smart phones is an annual rate of 48%. Industry data suggests that the market for MP3 players will fall 1.6% a year. However, video capable MP3 players are supposed to grow 47% a year through 2011. Management believes they are in a good position to take advantage of these growth opportunities.[2]
| Segment Revenue | |||
| 2007 | 2008 | % Growth | |
| PC | $226,208 | $272,796 | 20.6% |
| Digital Lifestyle | $40,579 | $88,261 | 117.5% |
| Total | $266,787 | $361,057 | 35.3% |
Synaptics has been investing heavily in value engineering and material science, working with its partners to aggressively take costs out of capacitive Touchscreen in order to bring prices down and to fuel mass market adoption. The firm recently announced that the Google Inc.'s (NASDAQ: GOOG) much anticipated smartphone "Nexus One" uses its ClearPad 2000 capacitive touchscreen sensor. Additionally, the company recently introduced its Fuse product, which integrates a number of interface technologies -multitouch capacitive sensing, haptic feedback, 3-D graphics, and force, grip, and proximity sensing.
The company has done an excellent job of positioning itself as the leader in its niche industry. It is poised to benefit from a spurt in demand for consumer electronics based upon touch technology. Market research firm Gartner's new forecast indicates mobile PC shipments are on pace to reach 162 million units in 2009, a 15.4 percent increase over 2008. In 2010, mobile PC shipments are expected to reach 196.4 million units.
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