NXP Sells Another Business Unit

Another chapter unfolds in the grisly tale of NXP. Yesterday the Sound Solutions unit, which had annual revenues of $255 million, was sold.

Having been sold for $10 billion by Philips in 2006 to private equity companies led by KKR, NXP has been subjected to the classic private equity management pattern of: load up the acquisition with debt, cut back the R&D, out-source everything possible, sack as many people as possible, sell off the bits which can be sold off and IPO what remains.

NXP’s wireless business was sold off to ST which passed it on to ST-Ericsson which seems to have been sacking people ever since.

NXP’s TV and set-top box IC unit was sold to Trident who sacked practically the entire Southampton-based contingent.

In-house manufacturing was savagely pruned with fabs in Caen, Hamburg and New York sold or closed and the Nijmegen fabs under threat.

To what purpose? To make money for a few executives and for the investors in the private equity companies who are already rich people.

At whose expense? The sacked employees and their families.

So private equity is a way of transferring money from the working middle-class to the rich.

In America, 24% of the national income goes to 1% of the population.

Private equity is one of the mechanisms by which this transfer of resources from the middle class to the wealthy is achieved.

We should have no truck with it in Europe.

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  1. December 24, 2010 00:58

    Dear David,
    NXP Divestments => Focus on Banking + ID => Future Technological Appendix from Bankers & Governments.
    Flowchart Decision:
    Ready to be Absorved by Status Quo Side?
    No => Manipulated Stock Quote => Mass Ambition => Get Savings from Middle Class
    Yes => Maximum Majority + Profit
    Final Conclusion for the Next Years: Middle Class Under More Control + Bilderbergs/Rockefellers/Rothsshits “Blue DNA Club” on Total Control + George Orwell Rolling in his Grave + Surfing in Hawaii Retired by NXP.
    “Remember, Never Tell Somebody How Far He Can Go…”
    Merry Christmas & Happy New Year!

  2. David Manners
    December 23, 2010 10:33

    That’s a brilliant analysis, FTM, really enjoyed it. I would say that the Silicon Valley-ites quite appreciate European tech else why would Intel pay $1.5bn for Infineon’s wireless business? And, of course, the whole world comes here for process technology from IMEC. And many come for scanners from ASML. But I agree your main thesis – maybe a marriage between can-do Asian execs and European R&D would work wonders. Particularly like the ‘flattening world’ metaphor – maybe the present kerfuffles could be described as flattening pains.

  3. FTM
    December 23, 2010 08:53

    My following remarks are uncharitable, but very true.
    David asks : “To what purpose? To make money for a few execs…”
    Could be, but methinks there’s another purpose – and a more fundamental one at that. It goes by the name money… as in development costs..money that is spent in retaining an R&D organization in Europe. These organizations were empires that the executives built on their way to the top. Large empires where 80% of the effort was spent on justification for survival (aka politics) and 20% on R&D. Admittedly, 80% of the actual R&D was top-class, but note that this is 80% of 20% of the budget.
    For most of the empires, delivery was not a priority. Democratic technical debates, obscure quality criteria, thoroughness, documentation, formality at work, work-life balance, etc etc took precedence. (notice how many meetings all this adds up to) Real work, when it was accomplished, was almost a side product. Of course there were several wonderful engineers out there who could create miracles. Some of them got frustrated by the empire building. Others, unfortunately, simply blended-in. The net-result was that the overall engineering output actually came down as empire building blossomed.
    More people, less work. More money spent, less money earned. More docs written, less docs read. More meetings done, less actions closed. More engineering delights, less commercial successes. A negative spiral that triggers more of the same until someone looses patience. This can aptly be summed up as “Cathedrals vs. Bazaars”. Unfortunately though, Moore’s law doesn’t apply to cathedrals.
    In European companies, everyone is empowered to stop something – but no one wants to put his neck on the line to do “something positive”. Contrast this with Asians – no one has time to stop the next guy from doing whatever he wishes. Because everyone is busy accomplishing something positive. Let’s admit it – Eu (unlike the silicon valley) is not the place for risk-taking.
    As the world gets flat, salaries in Europe and Asia are getting more and more comparable. So, the wage difference between the east and the west is not a sustainable reason to transfer work. But work still gets transferred. Because many (Eu) empires have failed to deliver in spite of approved budgets.

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