The Internet's Brave New World in Our Lives

By Eric Jackson05/18/11 - 08:00 AM EDT

NEW YORK (TheStreet) -- I spoke to NXP Semiconductor(NXPI_) CEO Rick Clemmer about a new announcement they made earlier this week, touting its "GreenChip" light bulbs. The announcement does paint an interesting picture for where the world is heading.

In a nutshell, NXP is putting its chips on light bulbs and partnering with another firm (GreenWave Reality) to help write applications which allow users to manage their energy consumption.

Effectively, every light bulb in your home or office will be able to report to you through a Web connection. According to Clemmer, this development will encourage 30% in energy savings right away, according to studies they've done, once users can see their usage and where they are wasting light bulb energy as heat instead of light.

They have also written an open-software stack that allows others like GreenWave to write applications to interface with this kind of application.

Besides just energy usage tied to the bulbs, GreenWave has developed power adapters and links to smart meters to better judge where energy is being wasted around the home of office to further drive conservation. These adapters track energy consumption at the outlet level.

Local and state governments are already moving to time-shifted energy pricing to try and better cap energy usage. This new technology should be seen as a further ally to them in that battle. Clemmer is hoping they will encourage the growth of the technology.

NXP's goal is to be the chip and middleground between the IP-connected objects and the platforms through which you interface with that data (likely Apple's(AAPL_) iOS andGoogle's(GOOG_) Android).

Most know NXP because of its near-field communication (NFC) chips. NFC will allow us to do secure payment transactions with a tap of our cell phones in the future. The NFC piece of the business is actually relatively small compared to what's making the company today with its chips. Clemmer told me that the lighting opportunity is actually a bigger one for NXP than NFC.

But it is interesting to see how these kinds of smart home applications are going to further drive mobile adoption in the future.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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Chatting With NXPI CEO Rick Clemmer

By Eric Jackson
RealMoney Contributor
5/5/2011 1:00 PM EDT
Click here for more stories by Eric Jackson

I had a chance to chat yesterday with NXP Semiconductor (NXPI - commentary - Trade Now) CEO Rick Clemmer from his Eindhoven, Netherlands office after his company's reported its quarterly earnings on Wednesday. The quarter beat analysts' estimates but the stock price sagged along with the rest of the market.

NXP Semiconductor is a spinoff from Philips(PHG - commentary - Trade Now). It held an IPO last August after some big-name U.S. private equity firms bought it from Philips back in 2006. Clemmer was working with Kohlberg Kravis Roberts (KKR - commentary - Trade Now) - one of NXPI's investors - at the time, and he soon was installed as CEO. He previously worked at Agere when it was spun off from Lucent and at Texas Instruments (TXN - commentary - Trade Now).

The semiconductor company is most famous for its exposure to near-field communications (NFC). NFC is starting to explode this year with mobile handset makers as it allows users to securely make mobile payments with a tap of their phones. It will also allow for an amazing number of new applications that will allow users to get location-specific information (and advertising) on their phones down the road from wherever they are. Although that gets the lion's share of attention from investors, NFC is actually a tiny part of NXPI's overall portfolio of products.

Here are some highlights from our conversation:

• Debt. The company had $3.7 billion in debt at the end of the quarter but management is waiting on government approval to sell their Sound Systems unit. When this happens, they will immediately have another $880 million in cash, which they plan to use to pay down their debts. The focus is on continuing to shrink the amount they owe, but Clemmer says it will be much smaller a year from now.
• Mergers-and-acquisition (M&A) speculation involving NXPI. Clemmer said that he's never surprised when rumors pop up in the space. He sees that as normal. NXPI is focused on continuing to grow itself organically and not be distracted by rumors. He sees his job as continuing to ensure that the company's portfolio keeps growing above market rates. I asked him why we're seeing more semiconductor deals occur. He believes it is because the industry's growth is slowing and that is forcing consolidation. Many semiconductor companies will only see single-digits growth this year. Those are the ones that need to look for faster growing companies to acquire.
• Will there be more secondary offerings? Some of the private equity investors recently sold their shares to the public as the stock has tripled since the IPO last August. Clemmer claims the owners didn't want to sel,l but others were clamoring for a larger public float of NXPI shares to trade.
• How much does NXPI make from NFC? About $2-$3 per handset. This can be more or less but that's a rough estimate.
• Will NFC grow at the rates he's previously suggested? He's sticking with their prior estimates of 70 million NFC handsets shipped this year and 150 million next year. He wants NXPI to have Intel-like (INTC - commentary - Trade Now) market share (i.e., 70%-80%) in NFC.
• Which carriers are leading and lagging in NFC? Clemmer wouldn't call out the laggards. He said every time he talks to Google (GOOG - commentary - Trade Now), they want to double their orders.
• Do you worry about Qualcomm's (QCOM - commentary - Trade Now) progress in NFC?Clemmer said they have to cooperate and compete with Qualcomm. He also mentioned they compete with the privately-held Inside Secure, but that he felt that unlike Inside Secure, NXPI was able to present customers with a single-vendor solution that was appealing.
• Will there be any more sales of products in the NXPI portfolio? Never say never, but Clemmer is happy with the portfolio at the moment.

Clemmer didn't have any speculation about when Apple (AAPL - commentary - Trade Now) would enter the NFC market. That's a question a lot of NXPI investors have. Some are hoping that iPhone 5 will have it. Others have speculated NFC support won't happen until iPhone 6. Clemmer just said that Apple was definitely studying the space closely and wanted to do something special when they decide to incorporate NFC into its products.

Knowing Apple though, I find it hard to believe the company is happy to let Google keep doubling orders for its Android phones while it has NFC all to itself.

[At publication, Jackson was long NXPI and AAPL.]

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NXP Semiconductor Ripe for Acquisition?

By Eric Jackson, Senior Contributor04/06/11 - 06:00 AM EDT

NEW YORK (TheStreet) - Monday's surprise announcement that Texas Instruments(TXN_)would buy out National Semiconductor(NSM_) at an 80% premium caught the market off-guard.

National Semi is an old-line analog chip company that's gone through countless restarts and refreshes. It's even caught the eye of activist investors like Relational Investors over the years, looking to push it to better unlock value in its shares.

The move by TI and the price paid suggest one thing: we're not at the end of the road of M&A by a long shot. The deal shows that TI is using cheap debt from the Federal Reserve to grow its business. Why wouldn't you borrow cheaply, pay an 80% premium even, when you can add $1.5 billion in annual revenues and $600 million in annual EBITDA.

What's more, National Semi has been growing its quarterly earnings by 11% year on year. So, you're simply performing a price arbitrage like the bankers do every day. Borrow at 7% (for example) to buy something growing at nearly 12%. I'll do that deal.

That increased EBITDA is only going to be about 10% of TI's EBITDA next year. But buying that is sure a loteasier to organically growing that.

As long as we have this environment of lower-priced debt, these kinds of deal -- especially in the mid-range market --- will be prevalent. And we'll also see 3PAR-like battles (as happened between Dell(DELL_) andHewlett-Packard(HPQ_) last year).

That's bullish for stocks in general. Who doesn't like a good "Merger Monday"?

The whole semiconductor space popped Tuesday on the news. I expect we will see it be particularly hot for deals, as you have a lot of bigger chip companies looking to grow and plenty of choices in the mid-market that are chalking up strong growth rates.

One stock I'm particularly bullish on is NXP Semiconductor(NXPI_). It is the purest of "pure plays" when it comes to near-field communication (NFC) which is subject of a lot of hype and speculation about how we will make mobile payments in the future.

Google(GOOG_) is already rolling out Android-powered handsets with NFC capability.Sprint(S_) announced NFC support for phones coming this year earlier in the week. Even Nokia(NOK_) made a splashy announcement this week about its new Symbian-powered NFC phones coming this year.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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Inside Secure CEO Sees Mobile Payment Boom

Eric Jackson03/30/11 - 08:58 AM EDT

NEW YORK (TheStreet) -- We've all heard that within a year or so we're going to be paying for stuff in stores with our phones instead of our wallets, using near field communication (NFC) technology.

I spoke recently with CEO Remy de Tonnac of Inside Secure. Based in Aix-en-Provence, France, Inside Secure is a fabless semiconductor company. It designs and marketing the secure chips and technologies used by payment cards and mobile phone manufacturers to allow contactless payments.

The company competes primarily against NXP Semiconductors(NXPI_) and counts Visa(V_),Qualcomm(QCOM_) and Nokia(NOK_) among its investors. Inside Secure is privately held, but it has said it thinks a public listing could make sense in the future.

The entire NFC space has been hot asGoogle(GOOG_) has announced support for contactless payments through its Android mobile operating system and as there has been much speculation about whether Apple(AAPL_) will enter the space.

Here are some highlights of de Tonnac's comments from our conversation:

We got started in this space in 1995. We were called GemPlus back then. We were a leader back then in smart cards. In 2000, we took a strong position with banks and what was known then as smart contactless cards. Today, we have a 75% market share in that business.

Back in 1999, our chief innovation officer wanted to put contactless chips into PDAs. We were really the pioneer in this space and got some of the earliest patents for what was to later be called NFC.

At the same time, Philips(PHG_) was working with Nokia on what they called "proximity services." They later coined the term NFC in 2002. We were among the earliest members of the NFC Forum with the company that's now known as NXP Semiconductor [then still part of Philips].

We all had this vision for where the industry was heading with payments, but we had to wait for the world to catch up with us. After leaving Inside Secure and being one of the venture capitalists in it, I rejoined the company as CEO a few years ago to help us get back some of the momentum we lost to NXP.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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Golden Plays: China Watch

NEW YORK (TheStreet) -- Contributor Eric Jackson explains what's behind China's appetite for gold and what the best China gold plays are.

Fri 03/11/11 06:00 AM EST -- Brittany Umar & Eric Jackson

Stocks in this video: NG | ABX | GLD | FCX | NEM | MT | PKX

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Video: NXPI is riding the NFC wave

Contributor Eric Jackson says that NXP Semiconductor (NXPI) is perfectly position to ride the Near Field Communication (NFC) trend this year allowing your mobile device to do mobile payments.

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NXPI: Riding the NFC Wave

By Eric Jackson, RealMoney Contributor , On Thursday February 17, 2011, 2:30 pm EST

Near field communication (NFC) is a new technology that's getting some buzz from the Mobile World Congress that just took place in Barcelona. It seems like every major phone vendor was discussing how it planned to incorporate NFC into its phones this year.

Over on the flagship site, I discussed yesterday how Apple might incorporate NFC into their future iPads and iPhones. Apple has not disclosed any of its plans for NFC, but the company hired a well-known product manager away from startup mFoundry to head up Apple's NFC efforts last fall.

The majority of the media focus on NFC has had to do with payments. We will soon be able to use our phones to swipe at some point-of-sale machine at a cash register, and the NFC technology will link the payment to some account you designate.

Believe it or not, you will be able to buy phones in the next year that claim they have NFC technology, but it will be no more than an extra sticker they've put on the package. The problem with that version of NFC technology is that it isn't as secure as most of us would like when our money is on the line.

The robust version of the service that all the major phone manufacturers will roll out this year uses NFC-enabled semiconductor chips. The leader of the pack in the space is NXP Semiconductors NV . NXP was spun off from Philips last summer. The stock has some big-name private-equity firms and hedge funds behind it, including KKR, Bain Capital, Silver Lake, Third Point and OZ Management.

NFC was discussed as a phone feature last year, but it definitely was not on the front burner. Many thought of it as an incremental feature to the product, like a front-facing camera. However, as NFC has grown in popularity among phone makers, the stock of NXP has increased. It's now doubled since its IPO last August.

This week in Barcelona, Google and Research In Motion both announced support for NFC. Google is definitely using NXP chips in its latest version of the Android operating system. RIM didn't give out any details on what it might use at the chip level. Until a few months ago, RIM hadn't shown much interest in NFC, except maybe with sticker support. Back in 2009, RIM declined to take part in a major NFC trial in Canada sponsored by Visa and the Royal Bank of Canada .

On Tuesday, NXP released its fourth-quarter results and first-quarter guidance. Some were hoping for big guidance that would propel the stock forward and perhaps tip off that the company would be supplying Apple's new products this year. We didn't get that specificity or huge guidance, but the outlook was bright -- and certainly management is being conservative here.

NXP said that 70 million NFC-chip-enabled phones would be sold in 2011 and 120 million would be sold in 2012. That's huge growth ... and probably understated. As the leading player in the space today and with a partnership already in place with Google, NXP looks to be well positioned to capture most of the growth in this nascent segment. Rumors have swirled for months that Apple will choose NXP as its NFC supplier. We'll have to wait and see.

Beyond payments, NFC technology allows you to tap your phone to another device to share information; you can wave your phone near an item at a store to see deals or special information; and NFC-enabled phones will let you "check in" on various platforms. We're going to see many new location-based applications written for phones because of this technology.

Perhaps because there wasn't an Apple-specific announcement on Tuesday's earnings call, NXP's stock price traded down a little afterward. But the buyers came out in droves on Wednesday -- the stock had one its biggest-volume trading days in its short life as the stock jumped about 10%. The jump was partially spurred by higher targets and positive statements from Goldman Sachs and Credit Suisse; both analysts were bullish on the company's future growth ramp.

It won't be an open market for NXP. Both Broadcom and Qualcomm have made small NFC-related acquisitions in the past few months. They will compete hard to win in the space. There are also smaller competitors like On Track Innovations , which already has relationships with Visa and MasterCard .

But NXP is definitely in the sweet spot to pick up most of the new growth. It will increasingly be an attractive acquisition candidate if growth continues to pick up. This stock is definitely one to watch for the next year.

[Eric was long NXPI and AAPL at time of publication]

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Video: Watch Out Visa And Mastercard, Apple Is Coming For You

Contributor Eric Jackson says Apple (AAPL) has its eye on getting into the mobile payments market thanks to Near Field Communication technology. They could be a major threat tobig credit card companies and EBAY's PayPal unit.

Wed 02/16/11 12:08 PM EST -- Eric Jackson

Stocks in this video: V | JPM | EBAY | AXP | BRCM | BAC | NXPI |AAPL | MA

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