[Letterhead of Bingham McCutchen]
Facsimile
DATE: | February 15, 2006 | ||||||
NAME | FAX | PHONE | |||||
TO: | S. Thomas Kluck II | (202) 772-9206 | |||||
Securities and Exchange Commission | |||||||
FROM: | Thomas L. Iannarone thomas.iannarone@bingham.com | (212) 752-5378 | (212) 705-7484 | ||||
PAGES: | (INCLUDING THIS COVER PAGE): 11 | ||||||
RE: | Acquicor Technology Inc. |
MESSAGE:
Mr. Kluck:
Attached find a marked copy of the Acquicor transcript that was distributed to you by fax yesterday and by overnight courier (delivered this morning). Upon further review of the transcript it was determined there were a couple of typos, etc. that needed to be cleaned up (none of which substantively alter the text of the transcript).
Please contact me with any questions.
Regards,
/s/ Thomas L. Iannarone
For transmission problems, please call (212) 705-7724
The information in this transmittal (including attachments, if any) is privileged and confidential and is intended only for the recipient(s) listed above. If you are neither the intended recipient(s) nor a person responsible for the delivery of this transmittal to the intended recipient(s), you are hereby notified that any unauthorized reading, distribution, copying or disclosure of this transmittal is prohibited. If you have received this transmittal in error, please notify us immediately at (same telephone number as in first paragraph — will duplicate) and return the transmittal to the sender. Thank you.
LEGAL LANGUAGE SERVICES
TRANSCRIPTION OF TAPE
DESIGNATED AS: 803964
Audio File Name: ACQ100u_32
Speakers: Gil, Steve, and Ellen
TRANSCRIPTION OF TAPE
DESIGNATED AS: 803964
Audio File Name: ACQ100u_32
Speakers: Gil, Steve, and Ellen
Gil: | First of all, thank you all for, for being here and Steve, Ellen, and I are thrilled to have a chance to talk about this thing. And thanks to Think Equity for supporting us so incredibly as they have for the last six or seven months. It’s been a great experience. Our objective is, is simple. We want to acquire a company in the technology industry that offers an opportunity to leverage the IP convergence mega-trend. Now that is the shorthand version of it. I’ll try to put some meat on those bones as we go into it, but that’s what we’re trying to do. In summary, we’ve got a great management team with lots of public and private company experience. We’ve had a track record of successfully building corporations, doing innovation, and doing turnarounds, and we’ve had a history of making money for investors. During my career I have done five turnarounds. In most of those I used an approach that I’m gonna describe in a second with this little, in this box that shows the formula. Now, every company is a little different. So, so you’ve got to be careful when you use formulas like this. But this, this has been the characteristics of at least four of the deals that I’ve done. And what I’ve done is I’ve taken an underperforming company, which was often undifferentiated as well, perhaps a company that was just sort of flatlined for a while, added vision and innovation to it, and created out-sized value for the investors. And I’m going to show you a few examples in a couple of minutes of specifically what that means. And that’s what we’re trying to do here as well. So I’m, we’re building on our historic experience. The market we’re focused on is related to the convergence of markets and technologies which is one of the really great mega-trends going on right now and it’s a major catalyst for growth opportunities. I’m gonna talk about that in more length. I think most of you in the audience are familiar with the |
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trust”. At the top is the three managers who you see sitting here right now. Myself. I’ve had a long career with lots of history of creating value. I’ll tell you more about that in a minute. I’m gonna skip down to the | ||
Ellen: | Okay. I spent over twenty years at IBM and I was responsible for three of IBM’s divisions. The Networking Hardware Division, the Networking Software Division, and a division called Software Solutions, which was primarily database, namely DB2, and languages. When I left IBM I went to work with Gil at National Semiconductor as a member of the office of the President. I then went to Apple and again worked with Gil as the Chief Technology Officer responsible for among other things their quality assurance processes as well as the implementation of the strategy for the operating system. In 1998, I went to Exodus Communications as their President. I joined them nine days before their IPO. Six months later I became CEO, and about a year later was Chairman. We grew that business to a twenty three billion dollar market cap business and we were the largest hosting company in the world with IBM claiming to be number two. That company, as you know, did experience a bankruptcy after many of their customers went bankrupt since so many of our customers were dot com. And since then I have been busy on four public boards, Colgate Palmolive, EDS, Aetna, and Watchguard, which is a small NASDAQ security company. Steve. |
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Steve: | Hi, I’m Steve |
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computing, that sort of thing. Some day these things are gonna take over. Some day we’re gonna have you know, light running computers instead of electrons. And we’re reaching the point that it’s getting difficult to make better computers because we can make them more powerful but we can’t get rid of the heat and light, eventually light activated computers could solve that. I’m very interested in robotics. I’m interested in mobile internet technologies. As the internet gets, you know, gets more versatile you know, I | ||
Gil: | A hidden talent I didn’t know you had Steve. Let me just sort of underline the obvious, which is Steve, Ellen, and I are completely committed to this enterprise. This is not a hobby. This is not a sideline. This will be the center of our activity and will be where we will focus all of our energy as we move forward. | |
Steve: | Yeah, let me | |
Gil: | The next couple of pages in the presentation, just recount in writing what we’ve just been talking about and I’m not going to take the trouble to walk through it a second time. But it gives the bios of our people. One point I want to make on this page relative to our directors and special advisors, however, is how important I view their role, not just because of their vast experience, but because we’re trying to build a serious company with good corporate governance. And we have, we have these folks to work with us who have many, many years of experience. There’s another benefit of all of that experience and that is we know a lot of people. I talked before about a golden rol-a-dex. I think collectively there’s probably not many people anywhere that we, one of us couldn’t, couldn’t reach. And that’s going to be important as we go through all the possible sources of new kinds of deals, and I’m absolutely confident that, that our challenge is not going to be finding a deal, and not, nor executing the deal. It’s going to be figuring out which one to do out of what will be no doubt a vast number to look over. But we’re committed to that and we’re working, we’ve worked out a pretty good filtering process to figure out on how we want to sort through those opportunities. Let me, I talked before about the formula. Let me |
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save it he was indeed gonna write it off. He said here’s your assignment. I want you to go look at the business for the next two or three months and then come back to me. If it can be rescued, great, I’ll back you. But if it can’t, tell me that, I’ll write it off and I promise you you’ll have another great job in, you know, somewhere in our company. So I went off and I did that and I came back three months later and I said I have some good news and I have some bad news. The good news is that I think we can save this company. It’s gonna take a lot of work and, but it can be done. And he said well what’s the bad news. And I said it’s probably gonna take about three years. Do you have the stomach to go through three more years of really lousy financial results. He thought about it a while and he said okay, but I have one question. What are you gonna do? And I said, well you know, there’s this new trend called the personal computer, which was new at this time, and personal computers will want to talk to one another. And the way they’re gonna talk to one another is they’re gonna use modems. The only problem is, most of the modems out there were too expensive, performed too slowly, and were just generally awkward to use. As I was looking through the company I found a small team of engineers working in a corner, nobody paying attention to them, and they had come up with a revolutionary idea for making a modem using digital signal processing technology and firmware to program it. And I said it’s the coolest thing I’ve ever seen. I think we can build a serious business in the modem space with that, and what I want to do is I want to refocus this division on that business, and that’s what we’re gonna do to make this successful. Frankly, we did better than I expected. Three years later, in 1986, we had eighty percent of the world market for world technology. Whether you talked about the Japanese market, the Swedish market, the South American market, the U.S. market, we had complete and total presence in all of those spaces, and in fact we made the guts to most modems made under other brand names. The only one we didn’t make was the Hayes modem, but ultimately we put Hayes out of business as a result of that. We went as a division of Rockwell, which was a pretty big company at that time, it had twenty five divisions. We started out in 1983 dead last. In 1986 we were first. And we were actually making more money on a percentage basis than Intel. So it’s a pretty good success. My boss said to me that gee, you’ve done a great job, I’ve got another problem for you, I’ve got this business in Dallas and Chicago that’s not doing so well. Why don’t you, I’m gonna give you a promotion, you’re gonna now own those businesses. So besides running the semiconductor and the modem business I want you to go fix these guys. And we ultimately, we ultimately did, and in particular the transmission systems division in Dallas, after we got it back on its feet we |
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shareholder value. Ultimately the business I ran helped create and run there, IPO’d under the name Connexant, and that was a two point nine billion dollars IPO. So that hundred, that little hundred million dollar business we started with grew out to be something really significant. So how did I do this? I took an underperforming business, added new technology, and created a huge amount of value, and that’s what our formula is. If you |
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to get my hands on a very well defined UNIX operating system that would have much more stability and much more competitiveness in the corporate markets. So effectively what I wound up doing was bringing Steve |
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Steve: | Now we’ve...Yeah. We’ve had you know, many different big, huge waves in mega-trends in technology. You know, you | |
Ellen | Okay. We also do think that the world is changing and it is truly dramatic. It does have networking at its, at its core. Just the impact of, of bandwidth is impressive, because that used to be a limitation. We didn’t do as much work on our computers |
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semiconductors is important, and we think the whole area of software, as well as IT products and services, would be a space for us to work in. So then if we look at what the market opportunity, again we think it is huge and it is based on the fact that we are seeing these shifts and we are seeing the IP convergence that Gil talked about. That convergence is increasing the integrated products and | ||
Gil: | So in conclusion, the investment highlights for this offering: a world class team, IP convergence focus which will lead us to a successful acquisition and growth opportunities, an extensive sourcing network and the ability to complete an M & A transaction, significant upside potential due to the |
[End of Recording]
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