Mannerisms

45 years! In all that time, run as a Philips division until the last two years, NXP's been a top ten player. Now, after a couple of years of having Wall Street management techniques applied to it, NXP has crashed out of the top ten rankings.

Not content with slipping to No.11, NXP has ended up at No.14, according to US analysts, IC Insights.

Poor old NXP, how can it really compete with solvent and sometimes cash-rich competitors when KKR in its cynical Wall Street way, issued $6.7 billion worth of bonds secured on NXP's assets, a debt loaded onto NXP, which NXP has to service, pay down and struggle to survive under?

One day NXP is sailing along without a debt in the world competing with the best in the world, and the next minute it's sailing along with $6.7 billion debts and still expected to compete with the best in the world.

In the process, the Wall Street people cream off a load of dosh for themselves and leave a crippled ship to sail onwards.

It makes you wonder what Wall Street management is good at. Clearly it's useless at managing its own industry, finance, because it is having to be bailed out by the US taxpayer. The private equity industry's forays into semiconductors have been a disaster, as witness Zilog, NXP and Freescale.

So what should the private equity industry try to manage? My choice would be the  biscuit manufacturing industry. 

Private equity companies' clever young MBAs could apply their formulaic ways of doing business, absorbed at business academies, to the biscuit industry where product life-cycles are 50 years or so, innovation is zero, R&D is zero, markets and capex are predictable, and managers don't require intellect, imagination or creativity.