Mannerisms

The Freescale acquisition gets curiouser and curiouser. First there was the $17bn+ value put on it compared to the $11bn valuation put on NXP – both similar-sized companies.

This was partly explained at the time by saying that the new owners would get rid of fab costs. But with Freescale fabbing 80 per cent of its chips internally, this can’t be done quickly.

Another part of the explanation for the valuation was that they’d bought Freescale at the bottom of the semiconductor cycle. No one else thinks it’s the bottom of the semiconductor cycle.

Then came the loading up of Freescale with vast amounts of debt. The companies’ customers are already worried if the company whether Freescale will be able to afford the interest payments. Freescale generates $1bn of cash a year, but how much of that will be needed to service $7bn+ of debt? Maybe most of it.

Then, bizarrely, two months after the annoucement of the deal, it appears that the management haven’t been engaged by the new owners to run the company yet.

There is little to be gleaned from the private equity fund owners about their intentions. They like to stress their privacy.

So everyone remains in the dark, customers, suppliers, management, and even Her Majesty’s Press.