Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

NXP Semiconductors NV (NASDAQ:NXPI)

2013 Deutsche Bank Technology Conference

September 10, 2013 10:30 AM ET

Executives

Rick Clemmer - CEO

Analysts

Ross Seymore - Deutsche Bank

Ross Seymore - Deutsche Bank

Good morning, let’s get started. Welcome to the 2013 Deutsche Bank Technology Conference in Las Vegas. Thank you very much for getting up early out here as well. We’re very happy to have Rick Clemmer, the CEO of NXP Semiconductor here to kick off the program for us today.

I think Rick is going to have few slides and then we’ll go into the fireside chat format. I’ll ask some questions and as always after that I encourage you all to ask questions. I believe there will be a roaming microphone. So if you have a question just raise your hand, I’ll call in and the mic will over to you.

So, with that let me pass it over to Rick for a few slides. And we’ll get started.

Rick Clemmer

Thanks Ross. I would say that first slide on forward looking statements. So, I think one other things for those of you that know NXP, we kept a pretty consistence strategy in place associated with our execution over the last few years especially since we went public.

Our focus is really to focus on unique application segments that will have an opportunity to drive growth and be able to leverage this strong portfolio that we have from an intellectual property view point as well as the second largest number of high performance mixed signal, design engineers in the world to really be able to drive solutions for customers, continue to drive margin expansion, I don’t think this works, and then obviously as a result of that continue to drive capital deleveraging, which if you look at it, we think that we’ll be down to below two times annualized EBITDA in terms of net debt by the end of this year, a little bit ahead of our original target that we’d established and then result of that is above market sales growth which I’ll show you in a minute, the results versus our peer group and unparalleled earnings leverage that is result of that.

If you look at the business, our largest business now is our ID business. Historically our automotive business had been the largest but in the middle of last year, ID passed our automotive business. Our ID business were basically two times or more the size of the next nearest competitor.

So, clearly a strong differentiate portfolio. It’s really focused on being able to drive security solutions that are actually shipped in the form of semiconductors. So the chip in electronic passports, electronic IDs, it’s also RFID tags, very standard, transit ticketing. So a very broad array of portfolio where we continue to drive the leadership position based on the fundamental core technology and expertise that we bring to bare associated with it.

Our second largest test business is our automotive business, in 2012 about 23% of total revenue. That business is in also a unique position where the areas that we focused on, which were away from the power train, but we have a relative market share up 3X or 4X in many of those cases.

The real focus for us is in the car radio where in mid and high in car radios we basically have won 27 of 28 different platforms associated with it, where we’re the technology provider of choice and then the other key areas is in remote keyless entry, where we are the leader and actually every car in the world manufactured except for Toyota uses our technology associated with it.

The areas that's been driving some growth for us over the last four or five quarters is really in the portably competing business where we’ve had some success in smartphone and tablets being able to drive some unique expertise into that area to be able to drive growth and then the infrastructure and industrial business which is a combination of our base station business, our lighting businesses as well as some of the audio for some of the smartphone business.

And then our standard products business, which is 28% of our revenue in 2012, not a strategic business relative to the product portfolio but a business that drives a very good return on capital and very efficient use of cash. We had some problems early this year or late last year and early this year on manufacturing operations which are kind of behind us now and we expect in the second half of this year to be back on track with the financial performance of that business.

So, if you just look at the execution, we talked about the revenue growth and you can see the growth that we’ve had as a Company, and then below that how we compare to the industry. And so you can see over the last couple of years basically growing at just under two times of the peer group from a growth rate view point and we feel like that we can continue to be in a position to at least outgrow the industry about 50%.

And then as a result of that, the earnings leverage that we’ve been able to drive is a Company, which clearly as we'd said targets were in 25%, 26% operating income going out in the end of this year and in a position where we think we continue to run that going forward.

So, if you look at what happens with that, the result is and I think Ross's model, I think you said you had about a $1 billion of cash flow in your model for next year, will generate a lot of cash as a Company. The continued performance associated with it will give us the ability to continue to pay down our debt and reduce our cost.

As we generate that cash and we get below two times annualized EBITDA, then we’ll have a lot of flexibility, whether we continue to be able to take advantage to pay down our debt further or repurchase some of our shares outstanding or actually look for some opportunistic M&A activities. So, clearly a position that we feel pretty comfortable to generate a significant amount of cash and the key for us is being in position where we can put that to the best use for our shareholders.

And then if you look at our stock and how we compare to the peer group, this is the chart that was pulled together and you can see trading at a discount to most of our peers associated with it, while yet growing faster than the group as well as approaching top tier from a profit percent. So just to put a few things in perspective for you before we go into the Q&A chat. Thank you.

Question-and-Answer Session

Ross Seymore - Deutsche Bank

Oh, you are working back over to the table here. Why don’t we just start off with just a little overview of where you think we are on either the macro cycle of Semi cycle? The last two years at this conference, unfortunately things were falling apart for the Semi industry whether that was seasonally or cyclically, whatever the issue was, we ended up with some pretty poor third and fourth quarters. How do you see things right now, whether it is from a cyclical or even a seasonal perspective?

Rick Clemmer

It is really interesting when you look at the industry. I think the key thing as you look at it is we don’t see a robust recovery at this point. What we see is a nice steady improvement, I would say. You talk about last year, we were actually fortunate, because we as a company had some leading design wins that allowed us a very strong growth in Q3 and a healthy performance for the second half of last year. And so that’s been one of the key factors for us. But if you look at the industry in total, I would say that we are still in a period of reasonable improvement but certainly no robust improvement.

Europe continues to be kind of in the doldrums, although clearly improving from where it has been. The U.S., people talk about the economic improvement in the U.S., but unfortunately when you look at it, a lot of it’s being driven by oil and gas, the energy side, as well as in housing and there's just not a helluva lot of semiconductors that are consumed associated with that.

And so the key then becomes China, and up until a couple of months ago China had been rather weak from an overall economic viewpoint. Now if you look at the manufacturing industry issue, we actually begin to see some improvement. So we are hopeful that that will drive some improved environment in China, but yet you don’t see a really robust improvement, see a nice steady improvement but not something that would be a typical semiconductor turnaround period.

Ross Seymore - Deutsche Bank

Just for investors, a little reminder for them, can you talk about what normal seasonality is in the fourth quarter? I think it is down a little bit, and just the puts and takes this year on what would lead you to be different from that potentially?

Rick Clemmer

So typically as a company, and pretty much from an industry viewpoint, Q4 is typically down slightly, a few percentage points on a seasonal basis. Q1 again is down a little bit and then seeing a pretty strong improvement in Q2, and the strongest period actually being Q3.

In Q4 this year I think as you talk about, underneath it there is an improvement in the general economy. Clearly that will be a positive perspective associated with it. We have some design wins like on the sensor hub that we're ramping associated with the smartphone and tablet, but it is starting in Q3 but it might be a little bit of a contributor in Q4.

But I think we would not expect anything that’s totally out of the norm in Q4 from a perspective. We haven’t set any specific guidance as a Company. But there would be puts and takes. Clearly people are beginning to talk about base station improvements or LTE in China, where we have about 60% market share based on the design wins to date. But it’s still not confirmed in our mind, the ramp associated with those base stations. We know when they’re built we should be able to get about 60% of the revenue associated with it. We're a little bit suspect about the actual build rates since we have been down that path before and have tire-tracks on our back from projecting that and not actually happening.

Ross Seymore - Deutsche Bank

The last question on that kind of macro front, on the supply side of the equation; I was looking back at the disti channel side of things and usually one of the big verticals that addresses that is industrial and in the second quarter of the industrial revenues across the entire industry seemed to grow about 10% or 11% sequentially, which was great. Unfortunately though the last time it grew that strong was four years ago and that was as good as it ever got. So the channel is pretty much filled. So with that little preamble, how are you seeing the disti channel? Do you think they have too much inventory to little? Do you expect a refill? How are you looking at things?

Rick Clemmer

So you can track the inventory in the channel. Clearly you have the most insight into your own inventory in the channel. It’s interesting; our channel inventory has been relatively consistent, around 2.4 months. If you go back over a period of time, in the most recent quarter we actually had shown a decrease to 2.2 months, after being at 2.4 for several years, with the exception of one quarter. We would anticipate that getting back at least to the 2.4 basis. We'd really like it to be more in the 2.5 to 2.7 months based on the fact that they need to earn a value that they bring to the process by maintaining some inventory.

I think what you are seeing is, is continuing to be a cautious perspective from the distis. As they continue to focus on their turns and earns, they are really keeping their inventories low until they actually see a robust upturn in orders and at least that this point in time we haven’t seen that and I don’t think they’ve seen that to be really be able to drive that robust improvement.

Ross Seymore - Deutsche Bank

Why don’t we dive a little bit deeper into some of the business segments you have? The ID side gets an inordinate amount of attention but not the NFC part, from my perspective. It is the part that I want to focus on, the core side, which I think has gone a good 25% or so CAGR over the last three years. Talk about the biggest drivers of that, that you have seen over the last couple of years and how those are going to continue to contactless banking, e-passport, et cetera.

Rick Clemmer

Sure. So if you look at it over the last couple of years, one of the strongest segments that's actually driven growth in that business and again you got to think about this business, it's really a security business that shipped in the form of a semiconductor, as opposed to being a typical semiconductor business. So it has some very significant barriers to entry from a technical point perspective et cetera. There is only a handful of players actually play in the market and have the expertise to be able to do that.

One of the things that's driven a lot of the top line revenue growth has been the wide deployment of passports, electronic passports and government cards. That's been a significant factor. As we look at kind of what's driven some really strength we have near term, it's really in contactless banking in the developing countries, where we’re just at the start of actual implementation associated with that.

So we see the banking side, credit cards as well as then eventually moving to mobile banking being a very significant growth driver associated with it. If you look at the last few quarters we have had the benefit of an accelerated deployment associated with contactless banking, but yet if you look at the deployment in China, its small single digit percentage of the deployment.

So we still expect to see a strong growth associated with that segment in the future. For Q3 and maybe the second half of the year we may see a little bit of pause as we really build their pipeline, as they deploy that and then they'll have to get back more in a normal basis before we get back to an ongoing growth.

But I think the combination of the contactless banking in developing countries with EMV, so pin chip in the U.S., it’s just beginning to be deployed in China. It offers an opportunity for a significant fraud reduction. If you look at the cost of fraud in Europe with the pin chip; it's a fraction of the cost in North America. And so there is really a benefit to the whole process if you have pin chip cards relative to the security associated with it. So then you can begin to think about all the other applications where security can add value, in authentication.

One of the areas that I personally continue to be quite excited about is authenticating access to the cloud. So you can prevent cyber security or cyber security threats by having your cloud closed, where you have to use a secure token to be able to authenticate your access to the cloud. So we'll see how that develops but I think that could have been a very significant opportunity for us over the next few years.

Ross Seymore - Deutsche Bank

And how do you see the competitive landscape within that core ID business? I think that's also a big difference between the core and the emerging side?

Rick Clemmer

Yes, in the core side there is really only a couple of players that are focused on the core side. It's clearly a strategic priority for us as a company. The other company that participates strongly in that space, if you look on the government side, we've got almost 70%, 75% share the remainder of the share with another company which it's like fourth or fifth on their strategic priority list as they talk about it. So it's really not at the heart of their business where clearly we believe connected security is at the heart of our business and our strategy going forward and actually it's very complementary with the combination of our security as well as just our overall communications capability.

Ross Seymore - Deutsche Bank

And I have to ask at least one question on the emerging side of things. Talk a little bit about what's happened with the NFC side; took off huge, had a little bit of a lull in the first half of this year, given some of Samsung's inventory issues, might have been a blessing in disguise for you. But talk a little bit about how you see that segment growing over the next year or two?

Rick Clemmer

Yes, I think we continue to be very excited about the NFC opportunity in smartphones and tablets. The opportunity, if we look at it, most people have projections whereby 2015 50% of all smartphones will actually have NFC capability deployed with it. For us we're really trying to position the combination of the NFC radio with a secure element which again provides a robust security associated with it.

Some of the carriers in the U.S. are trying to fight back quite hard because they realize once they've lost that secure element to someone else owning it, that they don't have the same strength relative to the connection with the customer. So we're actually seeing quite an interesting development that takes place, whether it's NFC with a SIM card as your secure element on your mobile wallet, which you can go to any street corner and have a SIM card unlocked. So I'm not sure I would want my bank account to be opened and associated with it. Or you actually have a separate secure element that's combined with NFC radio to really be able to drive a robust secure solution.

But we see continued strength associated with that. After being the supplier for Samsung on Galaxy II and III, we lost the Galaxy IV. It was pretty well known a year ago. We clearly plan on trying to be a significant player, at least give it a run for the money on Galaxy V. It's not like it's critical to the overall business but it clearly will help us continue to drive growth associated with that segment and if you look at HTC and Sony also -- we actually have about 200 different SKUs around the industry where we're the provider associated with it. So I think there is probably a single digit number of SKUs that we haven't won and a couple of 100 that we have won.

Ross Seymore - Deutsche Bank

And I know you have talked historically that the RF side of that (Audio Gap).

Rick Clemmer

…so most of the configurations from an architectural viewpoint are continuing to keep that separate. There are some people that are beginning to use an integrated NFC associated with it and then we want to be in a position where we can supply the secure element to really provide the bullet proof security which is our focus associated with even those.

Ross Seymore - Deutsche Bank

Why don’t we switch gears over to the infrastructure industrial side? You mentioned a little bit earlier about being well positioned, a 60% market share on the high power RF side of things. Talk a little bit more about how you’re positioned for the LTE rollout. And then any sort of real time color you can give because as you said we’ve had promises not from you as a company but from many of your peers about that always being one quarter beyond what they guide. At least you don’t have a multiple that reflects that yet?

Rick Clemmer

So if you look at it, the base station market is a significant opportunity for us. If you go back few years ago, when EDGE was really the predominant source, we probably had 25% market share. So if you look at 3G, we were up to 45% to around 50% market share based on the design wins and the shipments. But if you look at LTE, based on the design wins that we have with the Nokia, Siemens, Huawei, ZTE, Ericsson and Alcatel-Lucent, we see about 60% of the design wins that we’ve actually won.

We’ve seen a nice pickup associated with the volume in Q2 and we’ll expect to see that in Q3 based on the guidance that we have. Although, we have not seen something that I would call a significant uptick, robust basis, the one thing that you have to consider is that the power amplifier is a different part of the architecture than the network processor and some of the other and APGAs for example. So they actually may see different pick up rate than we would just because of the architecture and the structure associated with the system.

But we’ve seen a nice steady improvement and actually one of the key factors for us is the one company that we really didn’t have a significant share is with Ericsson and we began to see the initial shipments in Q2. We had some nominal shipments from a historic viewpoint but the new design win is beginning to kick in Q2 and we’ll expect to see that in Q3 and Q4 as well.

Ross Seymore - Deutsche Bank

So do you expect that whole TD-LTE and even LTE globally to continue to be a strong driver in 2014 as well?

Rick Clemmer

We certainly would expect it to be. But as I said we have tire tracks on our back from talking about growth in base stations and not materializing. So I think we’re a little bit cautious just about how significant it will be but we expect if there is base station shipped we will be able to see a significant growth in revenue.

Ross Seymore - Deutsche Bank

Then the final end market question from me is on the portable and computing side of things. In the last few years you guys have had a couple, about two or three product cycles that you sized for us instead of $200 million in revenue over three year basis, et cetera. Can you update us on where we are with the past two and then the Sensor Hub now that just kind of timely discussion without naming too many names?

Rick Clemmer

If you look at it, we started off in smartphones and tablets being a relatively small supplier a few years ago, really just focused on standard products and we’ve really been able to drive a very significant growth based on the interface capability where we provided some unique capability to be able to drive an integration of a number of different technologies and chips into a single chip for board size as well as cost advantages. We actually started shipping that in Q3 of last year. We’ve been able to also be a significant supplier in light [ph] load switches that are using cables as well as on the device associated with the connectivity and then the authentication associated with it.

So those have represented significant growth, kind of beginning in Q3 of last year through this point in time, although as you know the smartphone inventory supply chain has not been so steady through that period of time but it’s clearly been a contributing factor to the growth that we’ve had as a Company. The Sensor Hub then beginning to ship as we talk in Q3 and representing another additional item for us. But we continue to have a very strong position in the interface side, really being a significant player in smartphone and tablets in that space and we’ve won next generation, a number of those design wins and we can expect to continue to play a significant role.

Ross Seymore - Deutsche Bank

So the Sensor Hub rolling on doesn’t necessarily mean that the first generation parts are rolling off? You can get generation to generation and we…

Rick Clemmer

We actually are in the second generation in most of those areas that we’ve talked about.

Ross Seymore - Deutsche Bank

Got you.

Rick Clemmer

And in some of those cases we go from a position where we have wanted and we’re shipping a significant share versus a competitor to where we’re so sourced and a number of those design wins.

Ross Seymore - Deutsche Bank

Last question from me and then I’ll open up to the audience and see if they have anything is on the standard product side of things, I know you said that’s not a core part of your business, about 25%-30% of your revenues. Over the last couple of years, that seems to be the place where you stubbed your toe if there is anything, there is other areas that grow nicely but for one reason or another that’s the one that keeps popping up. Can you talk a little bit about the strategic alternatives you have for that business?

Rick Clemmer

Well, as we were talking at dinner last night, it was a very significant area of discussion. If you look at the cash that it generates and the strategic nature of it, it’s not a significant basis for us and as we’ve said for quite some time, if we have the ability to identify our buyer, they would pay us what we would deem to be fair value associated with it, we would have an interest in selling it. But it generates a good solid return and even through it does have more cyclicality than the rest of our business, clearly, the performance issues we had late last year and early this year had been a problem associated with it, but fortunately we are through that and we’ll see in our Q3 results the ongoing basis associated with it.

There is a limited pool of potential buyers for the discrete part of that business now. You have to remember our standard products business also includes general purpose logic, which is an IC business which is a little different than the discrete part of it. But on the discrete side there is a limited set of buyers. As someone had recommended last night why don’t you just spin it out so there are some opportunities to do that but one of the advantages that we have as a company is very significant tax efficiency.

So we still have a tax loss carry forward with it. We will basically cover our taxes for the next few years but even when we get through that, our agreements that we have with the Dutch Government would say that we'll end up with 10% to 12% tax rate going forward. So the ability to take advantage of that in standard products actually is something that we'd have to fully evaluate and understand before we consider any spinout alternatives associated with the business.

Ross Seymore - Deutsche Bank

But are you still pretty certain that -- I think half the problems of margins were out of your control and half of them you said were in your control?

Rick Clemmer

That’s right.

Ross Seymore - Deutsche Bank

The part that you can fix, you’re still confident that coming into third and fourth quarter that those will be fixed?

Rick Clemmer

Yes, as I said, we are on track. We have most of operational issues behind this now. The market issues that we saw actually saw an improvement even in Q2. I think there is about 9% growth in that space in Q2 and so we have seen that. It seems like the seasonality of the discrete part of that business is getting more pronounced. Q1 always seems like it’s extremely weak. It was in 2012, clearly was in 2013 and then in 2012 we saw kind of return in Q2 and Q3 and Q4 to more of a normalized basis before we had the significant market interaction in Q1 of 2013 again.

Now, we compounded that based on our own execution issues there at the same time, which really created some problems but we expect that business to return to mid-to-high teens kind of operating income basis in the reasonable period and so it will generate a good strong cash flow and a good return on capital, but it’s not strategic for us. So we are not investing to grow that business. We are happy just keeping the market share position there on a standalone basis and we will continue to see what we can do to improve the business.

Ross Seymore - Deutsche Bank

Great, why don’t I see if there is any question from the audience? Again raise your hand if you have any and wait for the mic to get to you. Don’t all do it at once though. We only have one mic.

Unidentified Analyst

Rick, can you go over again the base station component you have that market shares 60% that what exactly is a component and it’s a different lifecycle than the active PDAs et cetera?

Rick Clemmer

Okay. So where we participate is in the power amp side. So we shipped LD mosfs into the power amplifier and fortunately when you look design win position we have, we’ve gone from as I said 25% or 30% market share on EDGE to 45% to 50% or so on 3G and if you look design on LTE, we’re about 60% share. We're now ramping at Ericsson and little bit at Alcatel-Lucent, which were kind of the last two suppliers that we didn’t have. So we have been a significant supplier to Nokia Siemens and Huawei, the lead supplier kind of at Huawei and ZTE and now the ability to drive that into Ericsson and Alcatel-Lucent, as well will be a contributing factor to that 60%.

But this is a part of the architecture. This is totally separate from the FPGA or the network processors. It’s just on the power amplifiers side with a unique technology requirement associated with it and so we’re kind of positioned with one other company and a third company that kind of has some historic products that they’ve been in position. So it’s really just kind of two of us that are supplying the power amps side and base session market.

Ross Seymore - Deutsche Bank

Any other questions from the audience? Just hold on one second till the mic gets to you, please.

Unidentified Analyst

Just returning to the standard price, what exactly is the composition of the standard prices? Discrete you said and some others and is it sold through catalog and who are other players in the business?

Rick Clemmer

Sure, so if you look at our standard products business, transistors and diodes what we called GA business, is the largest segment of that. We’re clearly the industry leader associated with that, with the number two player kind of being ROHM, ON and Fairchild, Infineon into ST have smaller shares associated with it, but that’s one part.

Another part that’s probably maybe 20% or 25% of standard products is the MOSFETs where we compete with TI but clearly Infineon has a very strong position there and depending on whether its high power or low power, there is other players associated with it. So those are really the kind of key features associated with it and then in our Standard Products business, in addition as I mentioned we have our general purpose logic ICs and a small linear IC business as well that’s included in standard products and the leader there is Texas Instruments, we're kind of tied with them or maybe a little bit larger than them in terms of units, but they are a little larger than us in terms of dollars. And clearly TI is the leader when it comes to the linear side.

Ross Seymore - Deutsche Bank

Any other questions from the audience? Why don’t we stick a little bit on the standard products side but get over to the margin side of things. You’ve talked about your target of hitting either 25% or 26% operating margin depending upon the version of earnings you want to discuss exiting this year. One, are you still comfortable with that goal; and two, can you talk about what needs to happen in standard products and then in the IP side of the business to attain that target?

Rick Clemmer

So, we haven’t updated comment. So I guess we would stand by the target of exiting the year at 25% to 26% operating income and actually if you look at the improvement that we made in Q2, we’re pretty clearly on-track to be in a position to do that. Our HPMS business actually ran 27% operating income in Q2. So that kind of gives us the strong base associated with it.

For us to be able to achieve that we need get our standard products back into the 16% to 18% range operating income. So it would have to clearly improve from the kind of 10-ish percent in Q2. So it will be a factor associated with that and then we’d expect that business to operate kind of that range but have little more cyclicality than the solid HPMS business we have.

One of the factors that we had talked about in achieving that 25% or 26% was about 100 basis points that would come out of intellectual property income. That’s an area that we’re very focused on. TI has generated billions of dollars from their intellectual property portfolio. I actually believe in most recent quarter pre-scale $40 million or so from their IP income. So we’ve actually got more patents than Motorola, our pre-scale the Motorola original patents. So there is no reason we shouldn’t be in a position where we can achieve that 100 basis point contribution from IP in a pretty routine basis.

That process is one that takes an extended period of time to be able to realize that. You actually have to go sue some of the people that you’re trying to deal with to get their attention associated with it and then go through a discovery process and settlement negotiations associated with it.

So it’s a very significant ongoing basis and we feel pretty good about it contributing 100 basis points or so next year. It might be choppy where it’s 200 basis points one quarter and nothing another quarter, but we feel pretty good about being able to generate 100 basis points or so profit contribution from intellectual property agreements by end of this next year.

Ross Seymore - Deutsche Bank

One last chance from the audience? With the last minute, minute and a half we have Rick can you talk about the balance sheet side of the equation? You guys have done a good job of deleveraging. I think your blended interest rate is just over 35% or so. So you’ve cut that significantly. Talk a little bit about the plans on the balance sheet and when you think we’re going to start to see the Company focus on things other than just paying down debt?

Rick Clemmer

Well good straight man, we just announced, had a press release this morning where we’re going forward with a $0.5 billion unsecured three-year facility which is actually in the market being offered to bondholders as we speak. So that will be another step in our process to continue to reduce our debt cost.

If you look at it, as I said earlier we feel very comfortable we’ll have our net debt down to below 2 times annualized EBITDA by the end of the year. So that puts us in a very solid position. If you look at the combination of all the things that Peter and the team have done on the balance sheet, we can expect to see a continued reduction associated with our interest cost and that will clearly contribute to our bottom-line earnings growth next year and going forward from there.

Ross Seymore - Deutsche Bank

One last quick question, if -- where were you guys three minutes ago. You have 25 seconds. So go quick Tom.

Unidentified Analyst

Rick, you mentioned that Europe was still in the doldrums but better than maybe a few months ago. Is it picking up there or is it just flopping around?

Rick Clemmer

I think we see some economic improvement. Living there, you wouldn’t know that you were going through an economic recession to be fair. The shops are full, people are still buying, maybe not cars like they had in the past but I think we clearly see the European economic situation stabilizing or improving somewhat.

Northern Europe hasn’t been as bad as Southern Europe obviously, but we see the economic area improving. For us it’s not as significant in term of revenue as clearly Asia with about 65% of our revenue actually coming out of Asia associated with it, but we do see some improvement in the European economic situation. But still nothing to write home about or no real growth perspectives.

Unidentified Analyst

[Indiscernible]

Rick Clemmer

So the question was about our large private equity shareholders, which were about 65% of the share ownership at the end of the year and down to about 32% at the current time. Clearly when you look at it, they are seven years into their funds and a lot of or a couple of those guys are actually in kind of the last item left in one of their funds associated with it. So, clearly they have a motivation to be in a position to continue to reduce their holdings.

I think clearly they wanted to be more patient this time than they were with the last two that took place earlier this year, and so they've been a little patient looking at the price associated with it. They had the flexibility to do that on their own. We have to do the legal preparation of the paperwork that you know takes a few days to get done, but clearly we're not in any control associated with that other than just some guidance and counseling, which they usually ignore anyhow.

Ross Seymore - Deutsche Bank

Okay guy, so to keep on schedule we're going to end it there. Thank you very much Rick and Jeff.

Rick Clemmer

Thanks a lot, Ross.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: NXP Semiconductors' CEO Presents at the 2013 Deutsche Bank Technology Conference (Transcript)
This Transcript
All Transcripts