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Freescale CEO sees IPO when the market is right

Posted: 22 Nov 2010 ?? ?Print Version ?Bookmark and Share

Keywords:Richard Beyer? interview? semiconductor? embedded?

That's possible, but if we keep it up across the board for every product, it will become very inefficient.

You don't want to constrain engineers. But we need to be disciplined when we make such a one-off decision. For that, I rely on senior executives who have P/L responsibilities to be arbiters.

Challenges met
EET: Your three biggest changes at Freescale?

BEYER: First, get out of the wireless business!a momentous decision for a company who regarded wireless as its birthright. [Freescale originally spun out of Motorola.]

Second, creation of a senior leadership team, including Lisa [Lisa Su, senior VP and general manager, networking and multimedia], Reza [Reza Kazerounian, microcontroller solutions], and Tom [Tom Deitrich, senior VP and general manager, cellular products and RF, analog & sensor]!all highly capable and committed.

Third, changing the DNA of the company: from a familial, comfortable company to an aggressive, dynamic and compelled-to-win company, more like Marvell, Nvidia and Qualcomm.

EET: How do you change DNA?

BEYER: I want our people to stop being so conservative. They give themselves allowance!by building in room!when they set their deadlines, so that they won't fail. I'd rather they set more aggressive goals for themselves!whether for sales, design or accounting. It's OK to miss once in a while.

EET: So, Freescale's out of the woods?

BEYER: On a healthy trajectory.

Third quarter income from operations (ended Oct. 1, 2010) was $1 million (compared to an $18 million loss in the second quarter of 2010, and a loss of $251 million a year ago).

EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) were $253 million for the third quarter of 2010 (ccompared to $229 million in the second quarter of 2010 and $119 million in the third quarter of 2009).

I saw Stephen Schwarzman, chairman of Blackstone, the other day. We have the confidence of our investors that we're on the mend. Our investors, even when we eventually do an IPO, are committed to sticking around and using the money raised in an IPO to pay down the debt.

EET: When's the IPO?

BEYER: Is our revenue growing? We are there. Is our profit growing? We are there. Is our structure of debt improving? We are there.

We are waiting for healthy macroeconomic signs and a positive semiconductor cycle.

EET: We're not now in a positive semiconductor cycle?

BEYER: We've seen some softness reported on the PC market. Look at other companies' second and third quarter results. You see some soft spots. Instead of staying in a 'beat and exceed' cycle, some are lowering their guidance.

EET: What about macroeconomics? Recovery?

BEYER: Wall Street needs to see more job creation in the United States. Companies are always careful in hiring because they want to absorb growth before expanding.

But on a global basis, I think the economy will improve. Now that China, India, Brazil and Russia have sizeable economies, even 10-percent growth in these regions will have an impact.

EET: You came to Freescale to rescue the company. At what point is your mission accomplished?

BEYER: There are two dimensions. One is to return the company to be a really good company!that can be seen and perceived by everyone.

Another is to bring solid returns to shareholders and those invested in the funds.

EET: What did Freescale gain by getting out of wireless?

BEYER: On an emotional level, that was a tough decision for all of us!especially knowing wireless is a fast growing market. But it's a business that required enormous investment and needed more. If we kept investing in it, we would have struggled in everything!including automotive, communications and industrial segments!areas where we can be huge.

Embedded processor company
EET: So, Freescale's no longer a wireless company. How do you describe your current identity to the world?

BEYER: We are a company of embedded processors!a good place to be.

It continues to grow, and it's the market where everyone!including companies like Texas Instruments, Intel and even Cisco!wants to play.

We are positioned to get a sizeable chunk of the automotive business, for example. As we pay more attention to automotive, we gain more trust from auto companies.

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