The issue of Conexant Systems Inc.’s next chief executive has been settled with the chipmaker’s new private equity parent expected to give him room to run the company.
Sailesh Chittipeddi, Conexant’s president, is set to become chief executive under San Francisco-based Golden Gate Private Equity Inc.
Last month, Golden Gate agreed to take Conexant private in a $282 million buyout. The private equity firm topped a $270 million January offer for Conexant from Hauppauge, N.Y.-based chipmaker Standard Microsys-tems Corp.
Under Standard’s offer, Chittipeddi was slated to run Conexant and take on a companywide engineering role.
Now Golden Gate also intends to put Chittipeddi in charge—after some speculation it could have turned to its own Dan Artusi, who ran Conexant for a while in 2007 and 2008.
Golden Gate is likely to be a fairly “hands-off” owner, according to one chip executive who was sitting in Chittipeddi’s seat five years ago.
“They have a very good expertise in semis and they understand how the business works,” said Jerry Fitch, chief executive of Irvine’s Teridian Semiconductor Corp., a maker of “smart” utility meter chips that last year was sold by Golden Gate to Sunnyvale’s Maxim Integrated Products Inc. for $315 million.
Golden Gate bought then-struggling Teridian from Japan’s TDK Corp. in 2005.
Fitch described the Golden Gate directors who joined Teridian’s board as “mostly hands-off.”
“It’s tough for them to be hands-on, because they aren’t day to day operators,” he said. “They think strategically as asset managers.”
Fitch was chief operating officer at Teridian when it was bought. Golden Gate put him in the top spot shortly after.
Conexant makes chips for multifunction office printers, digital picture frames, PC speakers and other devices and has annual revenue of $200 million.
Chittipeddi is replacing Chief Executive Scott Mercer, who led a restructuring at Conexant that drew buyout interest and is stepping down.
In December, Chittipeddi was named Conexant president after serving as co-president since mid-2009.
He joined the company in 2006 as senior vice president of global operations.
A native of India, Chittipeddi, 48, came to the U.S. in 1981.
Before Conexant, he spent nearly two decades in senior engineering and operations positions with Agere Systems Inc., now part of Milpitas-based LSI Corp.
He also worked for New Jersey’s Alcatel-Lucent and research units of AT&T Inc.
Chittipeddi—who’s named on 61 chip patents—has master’s degrees in physics and business as well as a doctorate in physics.
He lives in Tustin Ranch with his wife and twin toddlers.
Artusi
Onetime Conexant chief Artusi, now an operating executive at Golden Gate, is set to get a seat on Conexant’s board.
Artusi is believed to be a key force behind the acquisition. He led Conexant for about nine months until early 2008, making some drastic changes during his stint.
He brought in executives, cut some 700 jobs and stopped funding chip programs that were slow to grow or weren’t profitable.
Artusi left Conexant in what some said was a clash with Conexant’s formative former chief executive, Dwight Decker, and other directors over the pace of restructuring.
Chittipeddi is likely to have a free hand as long as he hits targets, according to Teridian’s Fitch.
“I would say that they are hands-off only if you present a business plan that you can achieve,” he said.
When Golden Gate bought Teridian, the existing team laid out a three-pronged strategy that involved job cuts, growing sales and business development, he said.
Golden Gate helped keep Teridian on track with its plans and “made sure that all parties were in agreement and that our goals were achievable,” Fitch said.
“I’m sure the Conexant team will work in a similar way with Golden Gate,” he said.
Going private will shelter Conexant from Wall Street’s short-term focus, according to Fitch.
“The nice thing about having private equity ownership is you don’t have to worry about quarterly revenue fluctuations,” he said.
Golden Gate, which has some $9 billion under management, has a track record of buying chipmakers.
It also owns Plainview, N.Y.-based Aeroflex Corp., a maker of chips for aerospace and military uses, and Germany’s Vistec Electron Beam GMBH, which makes electron beam lithography equipment used in chip making.
The private equity firm also owns Germany’s Lantiq AG, a maker of broadband chips that spun out from Infineon Technologies AG.
With those acquisitions, Golden Gate put directors in place but otherwise left management intact. n
