With speculation swirling that it might eventually be divested, Motorola Inc.'s embattled Semiconductor Products Sector (SPS) is now also faced with how to assess and rebound from the resignations of three executives, particularly Daniel Artusi, who headed the unit's largest operation.
Motorola officials maintain that the departures are coincidental. But the timing of the disclosures, just a week after Motorola president Bob Growney told analysts that Austin, Texas-based SPS' continued poor performance could lead to its sale, added more ambiguity to the already murky picture.
"[The resignations] are certainly going to at least cause some hiccups," said Will Strauss, an analyst at Forward Concepts Co., Tempe, Ariz. "Dan [Artusi] was a guy on track to ultimately head SPS. ... But when the ladder is blocked, when there are people out in front of you, your only choice may be to find another ladder."
Artusi has joined Silicon Laboratories Inc., an Austin-based fabless supplier of communications ICs, as chief operating officer. At Silicon Laboratories, Artusi will help lead a promising start-up that posted net income of $14 million on revenue of $103 million in 2000, its fourth year of operation. That progress has been slowed by the semiconductor slide this year, resulting in a loss of $9.5 million on revenue of $30.6 million through the first half of 2001.
The two other executive departures had actually taken place earlier in the summer, but were not publicly disclosed until last week. Thomas Conn Jr., who was general manager of SPS' Imaging Systems Division (ISD), has become president and chief executive of Cynergy System Design Inc., Austin. Hans Wildenberg, who had most recently served as SPS' director of order fulfillment, and was a former SPS director of manufacturing, has been named to head the sales and marketing organization at Fairchild Semiconductor International Inc., South Portland, Maine.
"The three didn't leave for the same company, and it does look like they left for opportunity rather than because of dissatisfaction with Motor-ola," Strauss said.
Artusi over the past two years had become increasingly visible as the general manager of SPS' Networking & Computing Systems Group (NCSG), which last year accounted for $2.6 billion of the sector's total sales of $7.9 billion. The group, which is responsible for much of SPS' prime IC portfolio, is being counted on to help lead a much needed resurgence for the ailing Motorola.
SPS has named Larry Walker, the former founder and president of C-Port Corp., a North Andover, Mass., network processor company acquired last year by Motorola, to serve as acting general manager of NCSG. Walker had been vice president of strategy within NCSG.
Greg White has been named general manager of ISD to replace Conn, and during SPS' reorganization announced in May, Chris Belden was named director of the newly created Technology & Manufacturing Division, which includes duties held by the now departed Wildenberg.
"All these moves were coincidental and had nothing to do with the speculation [of a spinoff or sale of SPS], which now seems to have taken on a life of its own," an SPS spokesman said last week. "We believe Larry [Walker] is a great choice [to replace Artusi] because from a strategy standpoint, he was very attuned with Dan's staff and the direction of the group."
The spokesman said Growney believes his remarks two weeks ago to analysts, regarding the fact that there are "no sacred cows," including SPS, have been "misinterpreted, and frankly incorrectly reported." Growney issued a memo to all SPS employees in an attempt to clarify his position.
"It was a hypothetical answer to a hypothetical question from an analyst," the spokesman said. "It's not like he was putting [SPS] on the table and saying we're headed toward that action. He and [chairman and chief executive] Chris [Galvin] are confident that SPS will return to financial health and continue to be part of Motorola."
Dan Scovel, an analyst at Needham and Co. Inc. in New York, said the three executives' departures, combined with the Growney memo to employees, has created even greater uncertainty about SPS' future.
"I wonder if Motorola really knows what they want," Scovel said. "And no matter how good SPS may be, they've got to be licking their wounds right now. If you drop the hammer on any semiconductor company at this juncture, they're going to cave in, because there's nothing to support them. Growney sort of retracted the 'no sacred cows' statement, but didn't really retract it. It's a heckuva time to be trying to make these kinds of decisions in the semiconductor industry."
Artusi last week said his decision to leave SPS was not based on dissatisfaction with Motorola, but rather his belief that Silicon Laboratories can be a significant company.
"[SPS] has a tremendous team with a tremendous product portfolio," Artusi said. "I wasn't looking to leave Motorola. I was pretty happy, actually. This is an opportunity to do something very different, and you can call it a midlife crisis if you want, ... but it is very different to be a chief operating officer [at a new company] than a corporate vice president at Motorola.
"These are very challenging times in the industry, and as a small company with all new products, [Silicon Laboratories'] opportunities are for growth," he said. "We have no baggage to manage. Everything we do is a clean slate."
The restructuring of SPS completed in May, and the strategy in place since Fred Shlapak became president last September, have been positive, according to Artusi.
"There's a very good and clear strategy in place [at SPS]," he said. "Now it's just a matter of execution and staying focused. ... I've been in the industry for 25 years and I've been through these recessions, realignments, and reorganizations. I'm pretty well aware of what it takes." OR