Executives at Arizona-based Microchip Technology Inc. are still blaming some of its corporate problems on the $10.3 billion acquisition in May of Microsemi Corp. in Aliso Viejo.
The most recent salvos were fired in an analyst call by Microchip Chief Executive Steve Sanghi and Chief Operating Officer Ganesh Moorthy, both defendants in a slander and libel lawsuit filed in October by former Microsemi Chief Executive James Peterson.
Moorthy criticized the work of Peterson, who oversaw 27 acquisitions and three divestitures during his tenure.
“The operations integration work is an enormously complex undertaking, as little to no integration of prior Microsemi acquisitions have taken place,” Moorthy said on the Nov. 10 conference call.
Sanghi accused the prior Microsemi executives of living high on the hog.
“We have shut down the executive floor at the Microsemi headquarters building, canceled the private jet account, terminated or sold many of the sports sky boxes, canceled golf and auto racing sponsorships, and substantially pruned many memberships,” Sanghi said on the analyst call. “As we reduced inventory and spending, Microsemi business has continued to do well.”
Moorthy at least acknowledged that Microsemi helped boost sales in the company’s analog unit 34% to $438.8 million and in the microcontroller unit 13% to $820 million. Overall, Microchip’s (Nasdaq: MCHP) revenue rose 42% to $1.4 billion in the September quarter.
“There was a strong EPS contribution from both, classic Microchip and Microsemi,” Sanghi said.
Bad blood surfaced shortly after the blockbuster sale. That same day Peterson, along with the entire Microsemi management team, was ousted by Sanghi.
On Oct. 9 the Business Journal was the first to report that Peterson and three of his former executives sued Microchip and its executives for alleged slander, libel and unfair business practices.
The suit alleges that Sanghi blamed Microsemi executives for Microchip’s underperformance after the sale, and that Sanghi fabricated claims that Microsemi was performing poorly leading up to and after the sale. It further claims Sanghi wanted to avoid paying bonus and incentive compensation, including commissions to Microsemi employees. The company has since initiated a commission-free sales structure.
Microsemi was OC’s fourth-largest chipmaker before the deal closed, employing 236 workers at its 110,000-square-foot headquarters. It had 5,042 employees worldwide through April, according to Business Journal research.
Since the acquisition, Microchip’s stock has fallen 21% to $75 and a $17.7 billion market cap as of press time.
WDC Adds Ex-Microsemi Director
At least one big-name tech company likes the work done by a former director on Microsemi.
Western Digital Corp. (Nasdaq: WDC), which maintains a large presence in Irvine, added Kimberly Alexy and Stephanie Streeter to its board of directors.
Alexy, 48, was on the Microsemi board from 2016 until it was bought by Microchip this year.
She has plenty of experience with winners in the tech world, also sitting on the boards of two companies based in Irvine: Alteryx Inc. (NYSE: AYX), which makes data analytics software, and CalAmp Corp. (Nasdaq: CAMP), which specializes in telematics products and services. In 2005, she founded Alexy Capital Management, a Rancho Sante Fe-based family office investment fund.
Streeter, 61, was previously chief executive of Ohio-based Libbey Inc., a producer of glass tableware and other tabletop products, and acting chief executive of the United States Olympic Committee. She’s on the boards of Goodyear Tire & Rubber Co., Kohl’s Corp. and Olin Corp.
Western Digital, which moved its headquarter designation last year from Irvine to San Jose, is the world’s largest drive maker, with sales of $20.6 billion in the fiscal year ended in June.
Irvine Mobilizes Inspectors
The city of Irvine is upping its mobile game for businesses and homeowners.
OC’s third-largest city by population— 276,176 as of January—implemented a new mobile device system so each building inspector will have a networked device in the field. It’s an effort to save time, eliminate paper waste and enhance customer service.
The system provides real-time, emailed correction reports and inspection results by end of day, and is targeting builders, contractors and remodeling homeowners, among others, the city said.
