Conexant in Newport Beach: went private in April after 12 years being public

Conexant in Newport Beach: went private in April after 12 years being public

Newport Beach chipmaker Conexant Systems Inc. is adjusting to its new life as a private company.

Gone are quarterly earnings pressures, extra regulatory and compliance costs, shareholder scrutiny and short-term outlooks.

In their stead: a whole new set of challenges and benchmarks under the direction of a private equity company with its own interests.

In mid-April, San Francisco-based Golden Gate Private Equity Inc. finalized its $282 million buy of Conexant, ending the chipmaker’s 12-year run as a public company.

Conexant ranks No. 53 on this week’s list of the largest private companies here.

Newly minted Chief Executive Sailesh Chittipeddi doesn’t seem to miss Wall Street and a focus on quarterly results above all else.

He said he welcomes the added time to develop long-term plans and see them through.

“That’s advantage No. 1,” said Chittipeddi, Conexant’s former president who took over the top spot during the transition.

As a private company “you tend to take a much more strategic view,” he said.

Private equity firms tend to hold investments for three to five years, giving Conexant a broader timetable than it saw in its last few years as a public company, when restructuring dominated.

Strategy

Conexant Systems Inc.

• 1970s: started as chip arm of defense contractor Rockwell International

• 1995: division named Rockwell Semiconductor Systems

• 1999: spun off as Conexant Systems

• 2002: Conexant spins off Jazz Semiconductor

• 2002: sells off wireless chip business, creating Skyworks Solutions

• 2003: Spins off Mindspeed Technologies

• 2011: taken private by Golden Gate

Conexant now is weighing business lines, new markets, positioning and branding, according to Chittipeddi.

“Our focus is entirely on growth. I don’t see challenges on profitability,” he said.

Conexant posted a $20 million 2010 profit on sales of $240 million.

Golden Gate is likely to be a fairly “hands-off” owner, according to a 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 Semi-conductor Corp., a maker of “smart” utility meter chips.

The company was sold last year by Golden Gate to Sunnyvale’s Maxim Integrated Products Inc. for $315 million. In 2005, Golden Gate bought then-struggling Teridian from Japan’s TDK Corp.

“That’s truly the case,” Chittipeddi said of Golden Gate. “They’re very respectful to the management they have in place.”

Conexant is expected to see more money go into research and development to drive long-term returns, another shift for Conexant as a private company.

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