* CEO targets first half of 2011 for IPO
* Freescale was taken private in 2006 (Corrects paragraph 12 to state that headcount was cut to 20,000, not that 20,000 jobs were cut)
By Gabriel Madway
SAN FRANCISCO, Dec 14 (Reuters) - Diversified chipmaker Freescale Semiconductor Inc’s chief executive expects the company to launch an initial public offering next year.
Rich Beyer said that if indications early next year point to a normal seasonal pattern in the chip industry, the company could have an IPO in the first half of 2011. [ID:nN27107088]
“The capital structure now is in very good shape. So will we have a positive macroeconomic environment in 2011. We think so,” Beyer said in an interview. “And will the semiconductor sector be seen in a positive light? We think so.”
Freescale makes chips for a wide range of uses, including cars, networking, industrial and consumer products such as Amazon.com’s Kindle electronic-reader.
“All of our core business have been growing, so the financial performance is clearly on a trajectory that we think will support an IPO,” he said.
The Austin, Texas-based company was spun off from Motorola Inc in 2004. Freescale was taken private by a Blackstone Group-led consortium in a $17.6 billion leveraged buyout in 2006. The consortium also included the Carlyle Group, Permira Funds and Texas Pacific Group.
Beyer said the company has not yet selected bankers to lead its stock offering, and declined to comment on the expected size of the IPO.
“We’ve talked to banks, but we haven’t made any decisions,” he said.
Freescale posted revenue of $3.5 billion in 2009. In its most recent quarter, ended Oct. 1, revenue rose 29 percent to $1.15 billion.
Nearly 40 percent of the company’s revenue comes from selling chips into the automotive market, and roughly 15 percent comes from consumer products.
Freescale also has $7.6 billion in debt. But the company has restructured its debt, Beyer said, with the bulk of it now coming due in the second half of the next decade.
Freescale is phasing out its wireless chipset business, which supplies handset makers such as Research in Motion Ltd . The company cut its headcount from 25,000 to 20,000 over the previous two years but began hiring again this year.
In August, private equity-backed Dutch chipmaker NXP Semiconductors NV priced shares in its IPO 28 percent below the midpoint of the expected range. That prompted Freescale to put its IPO plans on hold, a banker familiar with the matter said at that time. [ID:nN27107113]
“Obviously we watched it,” Beyer said. “We think for reasons that can only be explained by NXP and their sponsors, they did elect to go out in an ugly time ... the markets were not particularly polite to them.”
“But we believe that we have a very different business model,” he said. “Our product families are different.”
Beyer said that IPOs of other semiconductor companies have done well for shareholders, citing Avago Technologies as an example. That company went public in 2009. (Reporting by Gabriel Madway; Editing by Andre Grenon and Steve Orlofsky)