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CEO Abhi Talwalkar talks about his overhaul of chipmaker LSI [San Jose Mercury News, Calif.](San Jose Mercury News (CA) Via Acquire Media NewsEdge) Jan. 1--Founded in 1981, LSI is one of Silicon Valley's oldest and biggest semiconductor companies. But the Milpitas corporation ran into trouble about a decade ago when sales of the chips it made for various consumer products began to falter and its balance sheet sank into the red. So in May 2005, the chipmaker's board replaced its CEO -- company founder Wilfred Corrigan -- with Intel veteran Abhi Talwalkar, who has overseen a major transformation of LSI's business. The company -- which has 5,400 employees, about 700 of them in the Bay Area -- already has boosted its annual revenue from $1.9 billion four years ago to nearly $2.7 billion last year. But the 45-year-old Talwalkar believes LSI's revival has just begun. He described why in a recent Mercury News interview, which has been edited for length and clarity. Q What have been the most important changes at LSI since you took over as CEO? A We have recast this company in just about every single dimension in the last four years, with a majority of the changes coming in the last three. We've done nine acquisitions and two major divestitures. We've shuttered all of our manufacturing sites. The management team and board composition have completely changed. All of the product lines are now completely rebuilt. The mission has been to transform the company to be an undisputed tier-one technology leader again and to be around for the next 20 years. Q One of your changes was to have LSI focus solely on making chips and other products that work with data storage and communications, or so-called networking, devices primarily used by businesses. That's a big difference from the past, when the company largely targeted the consumer market. What was the reason for that? A Volatility in the consumer market is just tremendous, and it was just not a big enough business. It goes back to the old adage, if you're not No.1 or No.2, why are you in the market, because it kind of sucks being 3 and 4, right? The reason we liked storage and networking is there are really good fundamental drivers to these markets. Digital content and digital information are growing at 50 percent per year. Network traffic, whether it's corporate network traffic or traffic in the mobile wireless subscriber world out there, that's doubling every 18 months. So the fundamentals as far out as the eye can see are fantastic. Q How would you characterize the state of the company before you took over as CEO? A LSI was a leader in the 1980s and 1990s. But it kind of lost its way. It kind of went sideways. It was dispersed across way too many markets. There was limited synergy and strategic cohesiveness across the product lines. In fact, some product lines were doing things that compromised others. Q Sales to Seagate Technology account for about 17 percent of LSI's revenue and another 16 percent comes from IBM. Do you worry about having so much of your business tied to those two customers? A We've been working to diversify the company over the last four years and we've actually done a really good job. Dell is a very big customer of ours. The number of activities we have with Cisco Systems has grown dramatically in the last 12 to 18 months. Teradata has been part of our diversification of our systems business. HP is a big customer of LSI. Q Despite its increasing sales, LSI has remained mostly in the red over the past four years, based on generally accepted accounting principles. The recession certainly hasn't helped. But are you concerned? A Not many people appreciate this, but it takes about four or five years to turn around companies or rebuild busted product lines because, you know, it's 24 to 36 months to get the company's road map competitive again -- and it's another 24 months to turn that into revenue. So it's a 48- to 60-month process, and we are 48 months into this. Q How would you assess the health of the tech market? A The semiconductor industry is still a very, very tough industry. There are still a lot of players in it, and I've been fairly public about the fact that there probably are too many players. But there are so many drivers for tech spending as you look into mid-2010 and beyond. That includes everything from a corporate PC-refresh cycle that is likely out there, driven by both older equipment and Windows 7, to the whole push that's occurring with rich PDAs and mobile handsets. Some of the strength we've seen in the second half of this year has been health care-oriented investment in tech. The government also probably will continue to spend on technology. If we get through the next couple of quarters, I think tech has a really bright future Contact Steve Johnson at 408-920-5043. Abhi talwalkar Date of birth: March 10, 1964 Birthplace: Pune, India Residence: Portland, Ore. (he frequently commutes to Milpitas) Position: President and CEO of LSI Previous jobs: Before joining LSI, he held several positions at Intel, including vice president and co-general manager of the chip giant"s digital enterprise group. He also held senior engineering and marketing management positions at Sequent Computer Systems (now part of IBM), Bipolar Integrated Technology and Lattice Semiconductor. Education: Bachelor"s degree in electrical engineering from Oregon State University Family: He and his wife, Linda, have two sons, Anthony, 19, and Stephen, 15. Five things to know about Abhi Talwalkar 1. He has a taste for fast cars. He owns a Porsche Cayenne Turbo S and a Mercedes-Benz AMG CL 55. 2. He speaks three languages: English, an Indian dialect and some Japanese. 3. After 15 years of pressure, he capitulated and got not only one dog but two for his wife and kids. 4. He is finally getting serious about improving his golf game. 5. He loves spicy food and is always on the lookout for it during his frequent travels. To see more of the San Jose Mercury News, or to subscribe to the newspaper, go to http://www.mercurynews.com. Copyright (c) 2010, San Jose Mercury News, Calif. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |