Moving closer to spinning off its chip division, Motorola Inc. tapped a 20-year veteran of IBM Corp. to head the business.
Michel Mayer, a native of France, was named Freescale Semiconductor Inc.'s chairman and chief executive officer Monday.
The Texas-based business, with 23,000 employees worldwide and estimated 2004 sales of $5.6 billion, is one of the world's biggest makers of embedded processors used to program everything from cell phones to automobiles.
Most recently, Mayer was general manager of IBM Microelectronics, which makes customized integrated circuits, and served on IBM's worldwide management council. He left the company in November following a management reshuffle.
His previous IBM jobs included serving as general manager of the company's pervasive computing and networking hardware divisions, and engineering and product management roles in the U.S. and France.
Mayer was unavailable for interviews because Freescale is observing a quiet period mandated by federal regulators before a company goes public.
The 44-year-old replaces Motorola veteran Scott Anderson, 49, who was president and CEO for 11 months and oversaw the unit's return to profitability. Anderson remains president.
The timing for a public offering is good. Freescale's sales rebounded sharply in the first quarter, reflecting the chip market's recovery from one of the industry's worst recessions.
Sales totaled $1.4 billion, up 21 percent compared with last year's first quarter. Operating earnings totaled $107 million compared with an operating loss of $121 million in the year-earlier period.
The earnings included one-time net income of $51 million from items related to reversing reserves that are no longer needed, offset by $9 million in charges for the pending spinoff.
"I think they have to get out from under the Motorola umbrella and off on their own to see what they can do," said Gartner Dataquest analyst Stan Bruederle. "It's hard to know what to expect."
Freescale's close links to Motorola's cell phone business made it "very difficult" to develop relationships with competing companies, Bruederle noted.
About 26 percent of Freescale's sales are to Motorola businesses.
The unit could fetch a value in the range of $11 billion based on a multiple of two times sales, but investors may award a lower multiple because Freescale's margins are low, financial analysts said.
Another uncertainty is how much debt Motorola will assign the business.
Analysts expect an offering as early as late June.Copyright © 2014, Los Angeles Times