Mighty Miniatures

Experts are likely to say that the company suffers from the aftereffects of bad decisions at the top and that many of its divisions can barely make ends meet. They have been saying this for years about the Fairchild Camera & Instrument Corp. -- and they may be right. Yet last year Fairchild's shares rose by a greater percentage than any others on the New York Stock Ex change, spurting from $27.25 to $165.25.

Last week, going against the market's downtrend, Fairchild lifted to an all-time high of $210, an extraordinary 65 times annual earnings. This week the company will announce its 1965 earnings, and brokers expect to hear that sales last year grew 33%, to $185 million, and profits after taxes soared 300% , to about $8,000,000.

Fairchild Camera is a misnamed com pany whose eleven divisions concentrate on electronics and also turn out a range of products from heavy multiconductor cables to printing equipment. All the excitement is over one division, the Semiconductor branch. It put Fairchild on the ground floor in miniature silicon transistors, which are more effective than the original germanium variety; last year Fairchild had 30% of the booming U.S. market for silicon transistors. Fairchild's prize division also accounts for one-third of the market for integrated circuits, which are fleck-sized components that do the work of many transistors, and a series of them hooked together could reduce the innards of a TV set to the size of a cookie. The company has greatly broadened demand since 1964 by shrinking the average price of integrated circuits from $35 to $7. Improved technology, cheaper materials, and a new plant in low-wage Hong Kong all helped to bring the reduction.

Riches to Riches. Fairchild Camera was started as an aerial survey firm by an inspired tinkerer, Sherman M. Fairchild, now 69. His rise from riches to riches is an enduring business legend (TIME cover, July 25, 1960). Fairchild's father was the first chairman of Inter national Business Machines and made him by inheritance the largest single stockholder in IBM (167.000 shares now worth $85.5 million). Besides refining his taste for good living and pretty girls, Fairchild tended his investments wisely, personally developed the first plane with an enclosed cabin (the FC-1), manufactured the C-119 Flying Boxcar, and built superb but too costly hi-fi equipment. Like many inventors, Fairchild was a better creator than administrator.

Management is now in the hands of Chairman and Chief Executive Officer John Carter, 45, a rough 250-pounder who proclaimed shortly after taking over: "I know how to handle a sick company." Carter was lured from a Corning Glass vice-presidency nine years ago with a stock option offer of 23,800 shares (he now owns 52,250 shares worth almost $11 million). Sherman Fairchild withdrew discreetly to the board, has been more concerned with his chairmanship of the completely separate Fairchild Hiller aerospace firm, which recently bought Republic Aviation.

Gamble That Paid. Carter has diversified all through electronics, and has concentrated on the civilian market instead of defense business because he does not like the Pentagon's renegotiation of contracts. The best thing that happened to Carter was the arrival in 1957 of eight bright young scientists from the Shockley Semiconductor Laboratory, led by Dr. Robert Noyce, who walked in the door with the idea of making transistors of silicon. Fairchild gambled $7,000,000 on the idea and won. Noyce, now 38, is head of the Semiconductor Division, which contributes more than 50% of Fairchild's sales and probably 98% of its profits.

Some of the other divisions are not making money, and though Chairman Carter talks expansively about their future, Fairchild's fortunes will depend for quite a while on the one big division. As technology advances, Fairchild's executives figure they will be able to price their integrated circuits low enough so that they will come into common use for TV sets, telephones, even autos and washing machines.

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