MaxLinear, Inc (MXL)

MXL 
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MaxLinear, Inc. (MXL)

February 25, 2013 7:00 pm ET

Executives

Kishore Seendripu - Co-Founder, Chairman, Chief Executive Officer and President

Adam C. Spice - Chief Financial Officer and Vice President

Analysts

Vidya Adala - Morgan Stanley, Research Division

Presentation

Vidya Adala - Morgan Stanley, Research Division

So good afternoon, everyone. We are fortunate to have Kishore Seendripu, CEO; and Adam Spice, CFO of MaxLinear here. I'm Vidya Adala, and I work on the semiconductor team at Morgan Stanley with Jo Moore, and I'll be the moderator for this session.

Before I kick off, I just need to read the disclosure. Please note that all important disclosures, including personal holding disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at www.morganstanley.com/resourcedisclosures or at the registration desk.

With that, I thought the best thing for us to do to kick off is to -- for either of you to give us a very brief overview of the story, and we can then jump into different specifics following that.

Kishore Seendripu

Okay. Thank you, Vidya. So it's a pretty exciting time to be at MaxLinear. I think as a semiconductor fabless or a mixed-signal company, we have recorded some of the industry best growths. We had about 36% revenue growth last year. And we did that while stabilizing the gross margin, and in fact growing the gross margin to about 63% in the last quarter. We made some disciplined investments to really increase the TAM. Move the company away from consumer markets with short product cycles to operative class markets where product cycles are longer, 2 to 3 years. And then now making more disciplined R&D investments to move the company more towards the infrastructure markets where the revenue cycles are much longer, 6, 7 years.

What we do at MaxLinear is basically the access at the home. By that I mean that if you really look how you receive your multimedia content or your broadband data via [ph] cable, so whenever you have something coming off your coaxial cable at your home or a terrestrial TV antennae at your home or even a satellite dish, first, it goes into a very tough radio mixed signal product called the -- traditionally called the tuner, but today they're called broadband receivers for a variety of reasons, later I'll tell you that. We do this very tough broadband RF mixed-signal chips that make it possible for you to receive the exploding multimedia content out there, and whether it's over-the-top content or through regular traditional linear video sources such as cable operators or satellite operators. So that's what we do as of today.

But as we move forward, look forward, the company is spending more money and investment into how to get into infrastructure market, be it satellite or cable or outside of it where the plumbing for the content that comes to your home has to be changed or overhauled. And there's a lot of range [ph] radio mix-signal content in the infrastructure side. For example, cable had an infrastructure satellite outdoor units and even data centers and maybe wireless infrastructure. And that's where we propose to play.

So that's the overview of what MaxLinear is about. We have a very, very strong team. One of the world's best, I would say, radio mixed-signal and comm systems technology of about 200-plus R&D engineering staff. We have about 30% are PhDs and 85%, 90% are pretty advanced degree holders. It's a very, very world-class caliber R&D technology team.

And we augmented that over the last 18 months with what I call one of the best management teams for a company of our size, with the senior management having broad experience taking companies from tens of millions of dollars to billions of dollars in revenues. Adam Spice was one of the early employees of Broadcom and he saw Broadcom scale from some billion dollars to several billions of dollars in revenue and be our VP of Operations and so on and so forth.

So we feel really good. I think there's never been a greater opportunity to be a participant, whether as an equity holder or as an employee inside MaxLinear. I firmly believe that.

Adam C. Spice

Yes, I'd like to add one thing to what Kishore is mentioning that's very important. In my career at Broadcom, I was involved in about 50 acquisitions. And I think the one thing that always came through and would made us walk away from more acquisitions than anything else was really kind of was there a core strength or capacity on the analog design side? And we look at all these companies, they might have 75 or 100 employees or engineers and of which you might have 1 or 2 really good analog designers. And if -- you'd actually be lucky if you found that. And I think the one unrecognized gem within MaxLinear, which is allowing us to get into all these markets that Kishore mentioned earlier, is the fact that we have this incredibly talented, very big scale team of analog art designers, which is incredibly rare to find. I think, if anything, that gates companies' abilities to enter new markets. And I think that's the one factor that we don't have limiting us right now, is that scale of that very rare hard-to-find analog design resource.

Question-and-Answer Session

Vidya Adala - Morgan Stanley, Research Division

And just because you brought up Broadcom, they are one of your competitors in some of these end markets out there. And surely, they have these capabilities, too, it's probably a gating factor maybe for other people to enter the markets. But how do you think about how you've got -- you've put in the door already, which is established and you have a good track record of that? But also going forward, how do you remain ahead of these guys with deeper pockets in a way?

Read the rest of this transcript for free on seekingalpha.com