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NXP Semiconductors
NV CEO Rick Clemmer received the text message at 8:30 pm Wednesday. c & # 39; was
Qualcomm
Inc.
Chief Executive Officer
Steve Mollenkopf,
thanking him for working together, even though the chip maker was about to abandon its nearly $ 44 billion NXP takeover bid.
Clemmer did not answer until 0:01 in the morning. He had hoped that Chinese regulators would approve the merger before the midnight deadline, Eastern Time, set by Qualcomm.
The green light has never come. Now, Clemmer has to chart a new future for NXP, a Dutch company that makes computer chips for automobiles, as a standalone company.
"We were ready for that," Clemmer said in an interview on Thursday. "We were very confident about the closing of the transaction until a few months ago.We realized that it was a coin."
The companies announced their agreement in October 2016 but they got entangled in the American-Chinese commercial quarrel. The consolation of NXP was a $ 2 billion dissolution tax, which she had received on Thursday morning.
She will use the funds quickly. To appease investor anxiety, NXP announced Thursday a $ 5 billion stock buyback.
The most immediate challenge, however, could be to badure shareholders that NXP has a plan on what it will do next. Clemmer said NXP has missed potential business opportunities during the 21-month limbo, and badysts worry about whether the company's top management is engaged.
million. Clemmer exercised options and sold more than $ 400 million of NXP shares last fall while they were trading around $ 113. On Thursday, shares traded around $ 91. NXP Financial Director
Daniel Durn
left a year ago for the same role at the rival semiconductor manufacturer
Applied materials
Inc.
NXP reported a previous CFO in replacement.
"You worry about losing the right people," said
Stacy Rasgon,
An badyst from Bernstein, adding that NXP "probably needs a new management team."
During a conference call with badysts on Thursday, Clemmer said he and his team were fully engaged. He said that NXP has plenty of room to grow, but has not answered some specific questions. "You have to give us some time," he said. His most definitive statement was that NXP would focus on its business. "I do not think you see us trying to make a big merger," he said.
NXP must also face the reality that the markets in which it competes are changing. Housed in a leafy office park in the small town of Eindhoven in the Netherlands, NXP is a leading manufacturer of automotive chips, particularly for infotainment systems and sensors.
He also makes identification and public transport cards. On Thursday, NXP announced a 10% increase in its second quarter earnings to $ 54 million compared to the same period last year, with a 1% increase to $ 2.3 billion [19659017]. .
Intel
Corp.
last year decided to buy Mobileye NV of Israel to strengthen its expertise in autonomous vehicles, while
Samsung Electronics
Co.
in late 2016 agreed to buy the US automotive technology provider Harman International Industries Inc.
NXP could find itself marginalized. "A big part of what they sell are sensors and peripherals and infotainment-type stuff, but in the long run the premise is that the car will become more like a computer, and NXP will not. "No expertise today," said Tore Svanberg, an badyst with Stifel Nicolaus. He said that Qualcomm possessed this know-how, but not the relationship between the auto industry and NXP, which made the marriage attractive.
Clemmer told badysts Thursday that NXP could still partner with Qualcomm.
Clemmer said he and his boss had spent Wednesday at the NXP office in Austin, Texas, to be in the same time zone as many of his investors. Mr. Clemmer received the text from Mr. Mollenkopf of Qualcomm after the California-based company said late in the afternoon that it was planning to abandon the bid before midnight, except approval of the 11th Chinese Hour
. he spoke to the sales team in Austin on how to keep customers who were happy to agree Qualcomm happy. Then shortly after midnight, when the case was officially abandoned, he responded to Mr Mollenkopf.
"Thank you very much for those kind words," he writes. "I'm sorry we did not have the chance to work together."
Write to Stu Woo at [email protected]
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