Wednesday, September 21, 2011

More on the fiscal year effect

I got several questions about my chart a couple weeks ago that showed two different curves for the laser market depending on when you count your fiscal year. I'm taking some space here to explain it a little better.  The chart is below, and shows the quarterly results of representative laser suppliers aggregated over two different 12-months cycles: January to December and the same data for July to June.

The first question is: why does it matter? For one thing, if your company reports revenues on a year from--say--July 1 to June 30, your results will look very different than your competitor that reports from January 1 to December 31. Every company I know of reports their quarterly numbers quarter-over-quarter and year-over-year, of course. For what that's worth, that quarterly information becomes a common denominator. But the quarterly nuances are lost in the annual reports.

For example, TRUMPF had a rousing year ending June 30, with about 50% growth measured in both dollars or euros. That's fantastic, but keep in mind that TRUMPF doesn't report quarterly numbers. It doesn't have to report numbers at all, since it's a private company. The very good fiscal year followed two years of declines. Most companies reporting on calendar years only had one down year: 2009. So, TRUMPF looked like it was doing worse than everybody for two years, and now it looks like it outperformed. In fact, it's about the same--it just reports on different calendar.

The other question is: how can it make that much difference? In this recession, the four worst quarters all fell in 2009. So any company reporting on the calendar year saw a really bad 2009 and only upward results after that. TRUMPF simply split the bad quarters, spreading the bad quarters over two fiscal years.

There is one more nuance to this. People are most familiar and emotional about the metrics that they know best, not necessarily the ones that I have to use. For example, salespeople often speak of orders and pricing for sales that haven't happened yet, since that is where they are working with their customers. But those orders and pricing may be unrepresentative of orders earlier this year.

Another example is that people rejoice over recent good news and panic over recent bad news--even if it is stripped of its context. Part of my job is to put the context back.

Monday, September 12, 2011

The Next Cool Things in lasers--in cars

Just when you think you’ve thought of everything, there appears a new application for lasers in cars, this one from BMW: laser headlights. An application like this could mean millions of high-power diode lasers per year, which is a lot for that technology, and would amounts to the “Next Big Thing” if it catches on.

BMW says that the diode lasers would be more efficient than LED headlights, offering greater overall brightness. LED headlights are just now penetrating models made by Audi, Cadillac, Mitsubishi, and Toyota. The laser output has to be converted through use of a phosphor, of course, as it is with LED headlights. Laser sources could also allow for more refined projection onto the road.

Ten years to one million cars? BMW plans to introduce the laser headlights in a small number of vehicles in 2014. That’s 3 years away. My model for the introduction of features in cars suggests that 7 years after that the feature might reach 1 million cars, if it’s popular or required in some way. (That's because they first appear in luxury models, as options, and spread, which takes time.) In 10 years that might amount to sales of 2 million headlights (both sides) of, say, 10W each. Take your pick what the price should be. Be forewarned that carmakers are big, steady customers when you can get them, with long product cycles, but they are notoriously hard on their suppliers.

Laser spark plugs. For years there has been talk of laser spark plugs, another intriguing application. Using lasers to ignite internal combustion can enable a more uniform, greener, more stable combustion. With all the talk about hybrid cars and electric cars, going to a newfangled technology like laser spark plugs sounds expensive and, well, still half-baked. But imagine the market: millions of cars with lasers that never used them before. And after all, the conventional spark plug was patented by Robert Bosch and Nikola Tesla. Isn’t it time to improve on it?

The most recent buzz on this was in 2009, when Ford announced a collaboration with GSI and the University of Liverpool called LASIIC (Laser Ignition for IC Engines). More recently, work at Toyota and elsewhere was presented at CLEO 2011. 

It's cool stuff, but considering that it's years from introduction as a product, if ever, and adding 10 years to that, we have a good 15-20 years before laser spak plugs could be a million-unit phenomenon.