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New National CEO turns focus on revenue growth

Posted: 16 Mar 2010 ?? ?Print Version ?Bookmark and Share

Keywords:National revenue growth? power? analog? wafer fab?

Don Macleod has risen through the ranks of National Semiconductor Corp. to take on the CEO post late last November and has become the man with a missiongrowth in revenue.

Having joined the company, which now specializes in the design and manufacture of power, analog and mixed-signal ICs, at its Scottish operation in Greenock in 1981 he had been executive VP and chief operating officer (COO) since 2001. Before becoming COO, he had served as executive VP and chief financial officer (CFO), a position he held for 10 years.

During his 30 years with the company, he has covered the whole gambit of senior management positions in finance, operations and marketing.

His experience in the financial side of the company has seen him regarded as a safe pair of hands as National completes a restructuring which saw around 1,725 jobs, or 26 percent of its workforce lost and production at an out of date fab cut with closure of its facility in Arlington, Texas.

This has left the company lean but its wafer fabs are currently running at just 50 to 60 percent of capacity. However, there are no plans to trim capacity any further and investment is being made to upgrade its fab at Greenock in Scotland from 6- to 8-inch wafers. The company is also hiring staff there.

"We are in a very good position, the industry is picking up and we have lots of capacity," said Macleod. He sees this level of under-utilization of his fabs as a benefit and not a problem.

The surplus production capacity means that National is not being forced, unlike some other suppliers, to increase product lead times as demand picks up. "The capacity we have means that 80 to 85 percent of our products are on lead times of six weeks or better," said Macleod.

In December the company reported sales of $345 million for the quarter ended Nov. 29, topping Wall Street's expectations and the company's own guidance for the quarter boosted by increased demand in industrial markets. Gross margin for the quarter was 65.3 percent up from 61.1 percent in the prior quarter, but down from 65.8 percent in the year-ago quarter. Sequential gross margin improvement was due to a combination of a stronger product mix, higher sales volume and improved manufacturing cost performance, including some earlier-than-expected savings realized from wafer fab consolidation.

In 2003 under former CEO and current chairman Brian Halla (who is due to step down at the company in May) an initiative called National 2.0 was launched, in which it adopted a 60-30-30 strategy. An aim of 60 percent gross margin, 30 percent spending, leaving a 30 percent operating margin. "This was the goal and the essence of our thrust to become a high performance analog company," said Macleod.

A couple of years ago this strategy changed with the adoption of the National 3.0 initiative. "We had done a good job at proving we are a good high performance analog company but that sector was highly competitive we needed to differentiate ourselves in that space," said Macleod. "The answer was to leverage the analog capability in to some new, high growth markets."

"My focus is now to concentrate more on revenue growth," added Macleod.


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