By KRYSTLE CHOW
Published on the Ottawa Business Journal website.
Apr. 9, 2007

Mosaid Technologies Inc. president and chief executive George Cwynar is passing the torch along to senior vice-president of patent licensing John Lindgren after more than 12 years at the helm of the intellectual property licensing company.

Mr. Cwynar said in an interview that the move “makes sense” considering the company’s new focus on its patent licensing business, as Mr. Lindgren has previously worked in patent licensing for 20 years at Texas Instruments. He added that the position now better matches Mr. Lindgren’s skill set.

Mr. Lindgren has served as senior vice-president, general counsel and corporate secretary at Mosaid since November of last year.

“George added value for a business with different moving parts and helped to maximize the value for a diverse company,” said Mr. Lindgren about the switch, adding that the move was made easier since all the businesses that the company is focusing on are already reporting to him.

Mosaid also hinted in today’s announcement that it was considering a sale of its semiconductor intellectual property (IP) product business, which mostly designs and licenses semiconductor IP circuit blocks for fabless semiconductor companies.

Mr. Lindgren explained that the semiconductor IP business was still a “hard” form of intellectual property, and that the company would be concentrating on intellectual property rights and patent licences rather than the sort of technology licensing dealt with in its semiconductor IP segment.

Mixed reactions to management reshuffling

Leaving the company along with Mr. Cwynar are Mosaid’s board of directors chairman Thomas Csathy and chief financial officer Richard Boadway. ARC International chief executive Carl Schlachte is replacing Mr. Csathy as chairman, effective immediately. No successor has been named for Mr. Boadway, although the company said it was looking to name a new CFO by early summer.

“Mr. Lindgren is an internationally experienced executive with a track record of success in semiconductor patent licensing and litigation,” said Mr. Schlachte in a statement. “Since joining Mosaid in November 2006… John has demonstrated the leadership qualities that are required to take Mosaid forward as a focused intellectual property company.”

BMO Nesbitt Burns analyst Brian Piccioni had mixed reactions to the management shakeup, although he made the speculation that Mr. Boadway’s departure was most likely to do with the change at the upper echelons of the company.

“We believe many of the investment decisions by Mosaid, good or bad, in the past seven years or so have been Cwynar’s responsibility,” said Mr. Piccioni in a research note. “With the wind-down of the systems business, Mosaid is less of a tech operating company and is now really an IP licensing company, so we suppose Lindgren makes more sense as CEO considering Mosaid’s changed focus, although we note Lindgren has no small company experience and particularly no small company CEO experience.”

Mr. Lindgren indicated that he would be working within his strengths as a patent licensing specialist, as the company continues its strategic review of its semiconductor IP product business.

“I look forward to communicating with Mosaid’s shareholders as we embark on this new phase in the company’s growth,” said Mr. Lindgren. “By focusing on our core patent licensing competencies, I believe we can execute more efficiently and achieve greater shareholder value. We will also continue our ongoing review of Mosaid’s strategic alternatives.”

He said the company would not only look at patent licensing, but would also “narrowly tailor (its) research and development group to create cutting-edge technology to generate strong patents.”

“We want a clear tech-creation story here at Mosaid,” said Mr. Lindgren.

Mosaid recently completed the $20-million sale of its systems division’s automatic test equipment (ATE) business to Massachussetts-based Teradyne Inc. The sale had been announced in February as part of the company’s focus on its “highly profitable” intellectual property and patents business.

“The asset sale and patent acquisition are important steps in Mosaid’s strategic alternatives initiative, resulting in a company that is sharply focused on developing and licensing intellectual property,” said Mosaid chief executive George Cwynar in a previous statement.

Mr. Cwynar has served as Mosaid’s chief executive since 1994, guiding the company’s transition from being a semiconductor memory design house and tester manufacturing operation to its current guise as an intellectual property company.

Mr. Csathy has been a director of the board since 1991 and has served as chairman since 2002, advising on the company’s initial public offering in 1993. Mr. Boadway has been the company’s chief financial officer since he joined Mosaid in 1997.

Loeb lobbies for leverage

The management shakeup works well with stakeholder Loeb Partners Corporation’s suggestions during an intense public proxy fight last September, prior to Mosaid’s annual general meeting.

Loeb Partners, a U.S.-based investment firm “that represents the interests of the Loeb family and its affiliated entities,” had been sabre-rattling for weeks prior to the meeting.

In the weeks and days leading up to the semiconductor firm’s AGM, Loeb had acquired almost 10 per cent of Mosaid’s shares, and was pushing for the 31-year-old firm’s breakup or sale, arguing Mosaid was underperforming on the Toronto Stock Exchange.

Despite public support from other shareholders, Loeb was highly critical of Mosaid management, and suggested they be replaced with its own nominees.

“(President and CEO) George Cwynar, (CFO) Richard Boadway, and, most important, the board must dispense with hopes and dreams and focus their attention on creating value for owners” read a letter from Loeb’s fund manager Gideon King last summer prior to the AGM.

“Loeb’s (nominees) open up many possibilities, while those of (Mosaid) suggest that shareholders will be subjected to more write-offs, more losses, and more cosmetic restructurings under the helm of a board with a poor track record of confusing the capital markets, accentuating the negatives, and diluting the positives,” Loeb said in one of several press releases issued during the pre-AGM fight.

Mosaid eventually conceded its stock was undervalued and hired investment bankers to review options. An 11th hour agreement was reached behind closed doors between shareholders and Mosaid’s then seven-member board of directors to avert a break-up and sale: the board was expanded, creating room for three Loeb directors, including Loeb’s Mr. King, to join the board.

At the time, Mosaid chairman Mr. Csathy told shareholder the agreement averted “all out, hand-to-hand combat,” adding, however, that Mosaid wasn’t out of the woods yet.

“We’re going through a strategic review,” said Mr. Cwynar. “That’s our intent, to look at all possible options.”

At the time, Mr. Cwynar remained a director and CEO of Mosaid. Mr. Boadway, Mr. Csathy, acting senior vice-president Theodore Galanthay, Millard Enterprises president John Millard, consultant Donnie Moore and Carl Schlachte, CEO of ARC International also stayed on as directors.

They were joined by three Loeb-nominated directors including Mr. King, Emmett J. Murtha, and Eugene I. Davis

Reached at the hedge fund’s New York headquarters Monday, Mr. King directed all questions to new president and CEO Mr. Lindgren.

“I have no comment,” Mr. King told the OBJ, adding that Mr. Lindgren was a “terrific guy.”

With files from Roman Zakaluzny