MSCC

Microsemi Corporation (MSCC)

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Microsemi Corporation (MSCC)

November 15, 2011 3:30 pm ET

Executives

Steven G. Litchfield - Chief Strategy Officer and Executive Vice President

Analysts

Unknown Analyst -

Presentation

Unknown Analyst -

Hey, everybody, thank you very much for coming. We're very pleased to have Steve Litchfield, the Chief Strategy Officer from Microsemi presenting. He's the architect of such successful transactions as Zarlink and Actel of recent history and I'm sure we'll see a lot more from him. So Steve?

Steven G. Litchfield

All right, thanks, Pat. Thanks for having us here today. I'll walk you through a few slides with regard to Microsemi and a few questions afterwards. So our standard disclaimer. And just to give you a little bit of color on Microsemi, this hasn't changed too much, but we are very focused on Defense & Security, Aerospace, Enterprise, Communications and the Industrial & Alternative Energy markets.

So we do have probably the industry's broadest technology portfolio out there. We like to focus on things that are difficult. We like to focus on applications where we can solve very difficult problems. That's what we do best, where performance really matters, where we can really differentiate our product portfolio, where we can ultimately help our customers solve those difficult problems.

So on this slide, we've kind of highlighted our end market base today. So today, about 35% of our revenues goes into the Defense & Security market, 19% Enterprise & Communications, 26% Aerospace and 20% Industrial & Alternative Energy. I'll probably just take a brief moment and kind of highlight. So we just completed the transaction of Zarlink, as Pat mentioned, in kind of late October. So this changes a little bit, so the mix of business, our -- what ultimately -- our Enterprise & Communications, about 19% of revenues today will move up to kind of 33% to 34% potentially; and then Defense & Security probably comes down to kind of 25%, 26%; Aerospace probably moves closer to 20-ish percent; and then Industrial & Alternative Energy stays around the 20% level.

I think the important thing to point out here is, as Microsemi continues to grow, and I'll highlight, in fact, maybe I'll take the opportunity to switch to the next slide here. If you'll notice here -- so Microsemi's been very focused on expanding its SAM, this shows kind of a 10-year chart of how we focused around growing from a $500 million SAM up to a $4.1 billion. This enabled us to get to this $1 billion revenue run rate. As Microsemi -- as we sit here today, our focus and my focus, specifically, is how do we get to $2 billion. In order to do that, we've got to look at new areas, new focuses for the company. So you've seen us acquire a handful of companies, a handful of new technologies, several of our acquisitions have been technology plays. And so you've seen more penetration into SoCs, anti-tamper capability. You've also got some Rad Hard capability that we haven't had in the past, and then even going as far as kind of board-level systems as well. So this ultimately enables us to drive potential growth up into that $2 billion level. So this is where our real focus around putting more communications infrastructure in place such as focus around some of the Zarlink's product offerings and ultimately drive that SAM from $4.1 billion up to kind of $6 billion, $7 billion.

So again, this slide just kind of highlights our very comprehensive portfolio and we really do have a very, very wide range and breadth of technology. So you see in the middle there, where we actually do have programmable analog, processing on sense and control and configurable logic. This is something that's somewhat unique to a analog, mixed-signal company. This came through our acquisition of Actel about 16 months ago now. But it's a very wide range and this is -- our whole goal in life is really to take more Silicon on the board.

So I'll go through each of our end markets. So here I've highlighted the Enterprise & Communications space, it's about 19% of our revenues today. This has been, historically, a big focus for the company. We do have a strong IP position. Historically, we've talked a lot around kind of POE, LED backlighting, these are some of the -- a couple of the areas that we've focused on. You see on the bottom some of the customers that we participate with today. Huawei, Juniper, Cisco, Alcatel-Lucent. As you would expect also, I'll highlight here that the addition of Zarlink, these are all customers that those guys are focused on today and thus will become a bigger customer to Microsemi.

So here's a slide that just kind of goes through some of our communication strategy. And if you start kind of from the bottom left-hand side, you'll see that we began this about 5 years ago to really grow this piece of our business with an acquisition of power design where we focused on Power over Ethernet. But since then, we've added a number of new product offerings, so we have what we call our customizable SoCs. In that next box it's really focused around sensor control, power conversion, wireless LAN. Wireless LAN is something that has been doing very well for us lately. We've seen tremendous amount of growth around reference designs with now Qualcomm, Atheros and most recently, Broadcom, and that's actually driven a lot of growth as of late. And then, now with the acquisition of Zarlink, you're seeing the network timing and synchronization business as well as voice processing, Voice over IP, fiber-to-the-home are some of the key drivers from potential applications for our technology.

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