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IDT ex-CEO recalls battle with hedge fund investor

Posted: 10 May 2016 ?? ?Print Version ?Bookmark and Share

Keywords:IDT? MaxLinear? activist investor? Starboard Value? semiconductor?

Stories of chip companies being bought, divested or sold have been gracing the headlines quite more frequently than before. In fact, when news surfaced this year that hedge fund investor Starboard Value was all eyes on Marvell Technology Group, chip industry veterans were saying: "We've seen this movie before."

Integrated Device Technology Inc. (IDT) found itself targeted by the same hedge fund exactly four years ago in 2012. Although the Marvell and IDT's circumstances at the time of activist investor attacks greatly differ, the havoc wreaked by these campaigns remains the same.

Ted Tewksbury

Figure 1: Tewksbury: ...I'd rather be building the U.S. semiconductor industry.

The element that sets the two cases apart, including the possible outcome for Marvell, is the human factor. Ted Tewksbury, who was IDT's CEO in 2012, played a crucial role by staying on at IDT.

Tewksbury, who now acknowledges that he was caught off-guard, fought tooth and nail against the board members who were forcibly installed by Starboard. The battle lasted more than a year.

Confident of his own vision of IDT's future, Tewksbury, who remained the company's CEO until August, 2013, used every weapon in his arsenal to foil the interlopers. His lonely battle was partially successful, but it required a lot of sacrifice.

"It was a painful period of my career," he recalled. "What they [the hedge fund investors] didn't anticipate then, though, was I was going to fight back," Tewksbury said.

In an almost hour-long interview, we discussed his life after IDT, including his latest big project. Tewksbury became an interim CEO at Entropic in November 2014, and sold Entropic to MaxLinear in February in 2015. He also sits on two boards, at MaxLinear and Jariet Technologies.

We asked him to look back on his last 18 months at IDT, and what he learned about hedge fund investors. We talked about his concerns for the chip industry today, and what he hopes to do next.

Tewksbury hopes to get back to running a semiconductor company as permanent CEO. He said, "I thrive on the stress of the job. I tell my wife that not having day-to-day pressure is more stressful."

Tewksbury now consults with private equity firms and investors seeking acquisitions. "I'm embarrassed to say that many of those firms are Chinese," he said.

We asked, "Why are you embarrassed?"

He pointed out: "Because I'd rather be building the U.S. semiconductor industry. Semiconductors have been a strategic component [of the U.S. economy] that has made the country very competitive."

Pointing out the recent unprecedented rash of M&A deals in the U.S. chip industry, Tewksbury noted that U.S. semiconductor vendors are selling parts of their companies or whole companies, and cutting back on their workforce and R&D spending. They have generally stopped investing in the future, "often under pressure from activist investors looking for short-term gains," Tewksbury warned. "That' very worrisome."

EE Times: What's your life like after IDT? What have you been doing?

Tewksbury: As with any other unemployed former CEO, I've been doing some consulting, working with private equity firms and helping startups with fundraising and strategies.

EE Times: You also did a stint as an interim CEO at Entropic Communications.

Tewksbury: I was already on Entropic's board since September 2010 [when he was still running IDT]. But after the Entropic CEO scandal* broke in 2014, the board fired Patrick Henry and I was asked to run Entropic as interim president and CEO. Entropic became profitable for the first time in two years and we were able to sell the company to MaxLinear within six months. [*Henry, who led Entropic for 11 years, was found guilty of an assault infraction in Utah stemming from an incident with a woman who starred in the reality TV show 'Beverly Hills Nannies.']

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