Sherwood's All Smiles After Surviving Gateway Purge

Orange County Business Journal, Jan 3-Jan 9, 2005 by Simons, Andrew

Broadcom Named Most-Respected Fabless Chip Maker; Acacia Research Makes a Patent Play

TECHNOLOGY

Things have gone well for Ron Sherwood, chief financial officer of Gateway Inc. and the only executive of the former Poway-based operation to keep his post after the combination with eMachines Inc.

At least that's how it looked during last month's ribbon-cutting ceremony to officially mark the opening of Gateway's headquarters in the Irvine Spectrum.

Sherwood, an affable and charming guy-and a Harvard Business School graduate-was all smiles when asked how the integration was going between former Irvine computer maker eMachines Inc. and Gateway.

"Things are going well," said Sherwood, munching on a cookie. "There's always going to be bumps. But overall, things are going very well."

Gateway bought eMachines early last year for some $266 million in cash and stock. At the time it said it would cut 1,500 of 4,000 workers by the end of the year.

In an unusual turn, eMachines' chief executive, Wayne Inouye, took over the company that bought his.

Inouye then replaced virtually all of Gateway's executives with ones from eMachines.

Sherwood wins in another way: His commute is better.

A resident of Palos Verdes, Sherwood arguably had one of the worst commutes to Poway. Now that Gateway is in Irvine, his commute is half.

An interesting note on Sherwood: Prior to joining Gateway, he served as executive vice president and chief financial officer at Loudcloud-now Opsware Inc.-the lukewarm encore by Netscape Communications Corp. cofounder Marc Andreessen in 2000 and 2001.

Loudcloud managed the back end of Web sites. The company saw its shares rise a measly 2% on its first day of trading in 2001, long after the tech boom had faded. Loudcloud had been expecting much more.

Sherwood has a lot of other interesting experience, including a gig at DaimlerChrysler AG, where he was a key contributor in redesigning the automaker's development process and architect of a $3 billion cost-cutting plan. He's also held executive positions at Hughes Aerospace and DirecTV Group Inc., among others.

Respect Broadcom

Irvine chipmaker Broadcom Corp. won a nice prize.

It was named the Most Respected Public Fabless Company for 2004 by the Dallas-based Fabless Semiconductor Association. This is the fourth time in the past seven years that Broadcom has received the award.

"Broadcom is a proven leader in the semiconductor industry," said Jodi Shelton, cofounder and executive director of the Fabless Semiconductor Association. "We salute the company as a multiyear winner of this award with its outstanding products, leadership and innovation, and look forward to continued success from Broadcom."

Unlike chipmakers that actually make their own semiconductors, fabless companies design chips but outsource production.

Speaking of Broadcom, employees will be coming back to work this week to be greeted by Scott McGregor, the company's new chief executive. McGregor gave up his post as chief executive of Royal Philips Electronics NVs semiconductor unit in October to join Broadcom.

It's going to be a time of adjustment for Broadcom as workers get to know the new chief executive, who will put another imprint on the company as its third chief after cofounder Henry "Nick" Nicholas and Alan "Lanny" Ross. (Per tradition, looks like McGregor will need a nickname.)

Prior to joining Philips, McGregor was senior vice president and general manager at server software maker Santa Cruz Operation Inc., the remnants of which now are at Tarantella Inc. in Santa Cruz and Utah's The SCO Group Inc.

McGregor also held positions at Xerox Corp.'s Palo Alto Research Center, where he worked on the first designs of the personal computer and software. He carried that work on at Microsoft Corp., where he helped design the first version of the Windows operating system.

He also worked at Digital Equipment Corp.'s workstation software group and did some consulting work for Scientific-Atlanta Inc.

There's been a lot of anticipation about how McGregor will operate at a company growing as fast as Broadcom is.

Stronger Hand

Newport Beach-based Acacia Research Corp. will have a bigger stable of patents when its deal to buy Global Patent Holdings LLC closes early this year.

The buy gives Acacia control of 27 patent portfolios, including 121 U.S. patents and some foreign ones. The acquired patents cover broadcast equipment, spreadsheet programs, credit card receipt processing among other devices, Acacia said.

Eleven of the patent portfolios have produced more than $40 million in licensing revenue so far.

Part of Acacia's business is acquiring patents and then pursuing licensing deals based on the technology.

"This acquisition would significantly expand and widely diversify our revenuegenerating opportunities and would accelerate the execution of our business strategy of acquiring, developing and licensing patented technologies by two to three years," said Paul Ryan, chief executive of Acacia.

Acacia is set to pay $5 million upfront and $2 million more in the next two years after the deal closes. It also will give Global Patent owners 3.9 million shares of Acacia stock-worth about $20 million at recent check.