Newport Beach-based Mindspeed Technologies Inc. brought in a new finance chief in the darkest days of the recession.
Bret Johnsen parachuted in and saw a chance to clean house.
“One of the opportunities for me, right out of the gate, is that we were headed into the worst economy of our lifetimes in the second half of 2008,” he said. “It gave me the chance to make a lot of changes that I thought really needed to be made.”
At Mindspeed—a maker of networking and telecommunications chips—Johnsen cut jobs, trimmed costs, reworked debt, sold stock and raised cash through patent sales.
The moves helped reposition Mindspeed for profitability and brought renewed attention from Wall Street.
Johnsen was honored with the Public Company award at last week’s CFO of the Year awards presented by the Business Journal and the Orange County and Long Beach chapter of the California Society of Certified Public Accountants.
CEO’s Take
“Bret has played a pivotal role in driving Mindspeed’s financial execution and increasing stockholder value,” Chief Executive Raouf Halim said.
Mindspeed’s chips go into routers, switches, gateways and other gear. Its biggest customers are large Chinese networking companies, including China Unicom Ltd. and Huawei Technologies Co., as well as Japan’s Nippon Telegraph and Telephone Corp.
Johnsen’s first task at Mindspeed was to tackle the balance sheet, which was a “huge issue,” he said.
“There was $46 million in debt due in a year and not enough cash to pay it off,” he said. “There was a very significant liquidity concern.”
Johnsen refinanced through a series of steps to raise cash and rework debt.
“We ended up with $43 million in cash and only $25 million in debt that converts to stock outstanding,” he said. “We are in the best cash position the company has been in for five years.”
Next up: re-approaching Wall Street.
“We put a lot more focus on investor relations,” Johnsen said.
When he came on board, only two analysts covered Mindspeed. Johnsen brought in an investor relations specialist and focused on communications with Wall Street.
Some seven analysts cover the stock today.
Through a series of stock sales, Johnsen shook up the company’s investor roster by nabbing more institutional investors.
“We improved the percentage of institutional investors through the equity raises and changed the shareholder mix,” he said. “It removed a certain element of volatility in the stock.”
The challenge isn’t over. Mindspeed’s shares have been on a bumpy ride in the past year. The stock is roughly flat in the past 12 months on a recent market value of $225 million.
The company got dinged earlier this month when it gave a conservative sales outlook for the current quarter and warned of “weaker demand” from its big customers.
The demand picture has “stabilized,” Chief Executive Halim said.
The changes at Mindspeed were made easier because of Johnson’s “great relationship” with Halim, he said.
“He’s been very supportive of all the changes,” Johnson said. “Seeing eye-to-eye on things certainly has made it easier.”
Johnsen came to Mindspeed to replace Simon Biddiscombe, who stepped down in early 2008 to become chief financial officer at Aliso Viejo’s QLogic Corp.
Earlier this year, Biddiscombe was promoted to chief executive of QLogic, a maker of electronics that speed up the flow of data on corporate storage networks.
Johnsen was recruited to Mindspeed, his first post as chief financial officer, after nearly a decade at another well-known area chipmaker, Irvine’s Broadcom Corp.
“I had always had aspiration of being a CFO,” Johnsen said. “I viewed it as an opportunity for me to move up in my career. Mindspeed tracked me down.”
At Broadcom, which makes communications chips for computers, cell phones and other consumer electronics, Johnsen had half a dozen different job titles.
“I had six different jobs in three different business groups over the nine years there,” he said.
Most of the posts were in operations and finance. His final job there before leaving to go to Mindspeed was principal accounting officer and corporate controller.
Broadcom, Johnsen said, “is one of the greatest stories in technology.”
“It was exciting to be a part of something like that, where you were growing at such a tremendous pace,” he said.
Johnson wasn’t touched by the stock options backdating probe of Broadcom that played out in recent years.
“I never even got a call through that whole investigation,” he said.
Earlier Stints
Prior to joining Broadcom, Johnsen served as corporate controller for Chicago-based Classified Ventures LLC, an Internet company specializing in classified advertising and owner of websites Cars.com, Apartments.com and others.
Before that, he had finance posts at San Diego-based cell phone chipmaker Qualcomm Inc.
He holds an accounting bachelor’s from the University of Southern California and a master’s in finance from San Diego State University.
Johnsen, 41, is a Southern California native. He lives in north San Diego County with his wife and two young kids.
He counts USC football and skiing as his biggest hobbies.
