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Freescale overhaul is a 'work in progress'

Posted: 08 Dec 2009 ?? ?Print Version ?Bookmark and Share

Keywords:Freescale restructure? automotive? networking?

Nothing displays how seriously Freescale Semiconductor Inc. views the challenges facing the company than some of the tough discussions begun behind closed doors some 18 months ago.

Those discussions led to the tough decision to exit the wireless IC business, layoff 25 percent of employees, refocus on a handful of market segments, dump some manufacturing facilities and reinvest millions in an old 8-inch fab, tighten costs controls to boost operating margins and boost cash flow and focus on debt reduction.

There is no let up today in the tough love being doled out by Freescale's board of directors. A fly on the wall during a senior management meeting at the company's Austin, Texas, office would be amazed, though, to find executives reserve the bluntest criticisms and toughest goals not for the rank-and-file employees, but for themselves. And they are not even reluctant to share the message that Freescale is a "work in progress," with outsiders.

"We are on a journey and we are not where we should be yet," said chairman and CEO Rich Beyer. "Until we get perfection in every area, we are not good enough yet."

It's not that the company has not made significant strides in its turnaround program.

Since Rich Beyer joined as chairman and CEO about 18 months ago, the company after refocusing on the automotive and networking equipment markets has turned free cash-flow positiveahead of its first half 2010 targetscored major design wins in key industry segments, paid off almost $2 billion in long-term debt and raised cash and short-term investments to a more comfortable $1.3 billion as at the end of the September quarter.

The more significant changes that are expected to drive the company's growth are not in the financial numbers, however, but in the key executive appointments made by Beyer over the last one year. Freescale today has a new slate of top executives, some of who have been with the company less than a year.

"We like working together, we like winning together and we like supporting one another," Beyer said. "We recognize the foibles of one another because each of us has them and we have ways of backing each other up. We have a common purpose in mind, which is to take this company, which in our judgment once was a great company, and turn it back into that great company."

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