Texas InstrumentsAge: 51
Year Named CFO: 2003
2008 Earnings: $1.9 billion
Number of Employees: 26,300
Compensation: $3,068,863
Stock Options: $871,125
MARCH: “We’ve disciplined ourselves to develop a business model that generates plenty of cash to meet business needs.”
ONE VOTER: “He always provides a high level of financial detail and transparency and does a good job communicating the company’s long-term objectives.”
When demand for electrical equipment declines, chip makers tend to feel the pain first, and usually the most acutely. At Texas Instruments, net income dropped 27.7 percent last year, to $1.9 billion, on a 9.6 percent drop in revenues, to $12.5 billion. The deterioration has accelerated markedly this year, as revenues sank 36 percent in the first quarter from the same period a year earlier, to $2.1 billion, and net income plunged 97 percent, to $17 million.
“Semiconductors are at the front end of every supply chain for almost every electrical or electronic device manufactured or designed in the world,” says Kevin March, the Dallas-based company’s chief financial officer.
Most downturns in the semiconductor business are driven by excessive inventories or manufacturing capacity, March notes, but the nature of the current slump — a byproduct of the global financial and economic crisis — has forced the company to prepare for a potentially longer and more severe decline in demand than normal. “In the last six months, it has been vitally important to make sure we are well positioned to weather our way through whatever the economy holds for us,” the CFO says.
The 24-year company veteran is doing just that, announcing in January a round of layoffs and early retirements to trim the payroll by 3,400, or a little more than 10 percent. TI is also slashing research and development spending on baseband chips for wireless phone handsets, one of its four major product lines, reflecting its belief that this area is mature and holds less profit potential than in the past. Wireless chip sales tumbled by 40 percent in the first quarter and accounted for 26.4 percent of overall sales, down from 28.1 percent a year earlier. “We are now running these products as end-of-life technology,” March says.
Tough moves like that should position the company to take advantage of growth opportunities elsewhere, he adds. In February TI acquired Ciclon Semiconductor Device Corp., a small maker of energy-efficient radio frequency chips for communications systems, for $111 million. The Bethlehem, Pennsylvania–based company fits TI’s long-term strategy of increasing its presence in power analog chips.
“We consider these business climates as good times to be engaged in acquisitions,” explains March. “Prices are more reasonable in times like this, as is a company’s willingness to be acquired.”
Click on the names below to view their individual profiles.
Arne Sorenson, Marriott International
Louis Baldwin, XTO Energy
William Wheeler, MetLife
To read the main article, click on America’s Best CFOs Get Tough in Crisis
Click here to view the complete rankings of America’s Best CFOs
