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The steely hand that built a Swiss chip star

Jürg Stahl is in no hurry to retire (Micronas)

The story of Jürg Stahl's founding of Micronas is a classic entrepreneurial tale, more typical of Silicon Valley than the Tösstal.

The Swiss electrical engineer and his co-founder took the firm from null to SFr125 million in eight years.

Stahl did nothing by the book because the book had not been written yet.

He acquired companies many times the size of his own, not once but twice.

Further, he relied too much on one customer, went public too early, taking advice from consultants, bankers, and advisors who were greener around the ears than himself, and then found himself facing a SFr100 million hole when backers balked at making an acquisition of a money losing venture.

He did all this and yet he kept his firm clearly on a strong growth track. And the company still thrives today.

Its last financial report belied the economic slump, breaking all its previous sales records. Group sales were SFr707.4 million, an increase of almost 25 percent compared with the previous year.

The start

Stahl completed an apprenticeship as an electrical engineer in the eighties.

Afterward he changed jobs often, which was unusual at the time, always selecting jobs that would challenge him to learn the kinds of things he felt he might have learned had his parents been able to send him to university.

Always at the back of his mind was the idea of gaining the experience he would need to run his own company.

In 1987, he was a product manager with European responsibility at Intel. He left to start Crosstec Engineer, his own chip design company and Nokia was one of the firm's customers.

He says he practiced what he learned from Intel's Bill Davidov who said that the high tech business is a service business.

"It is an approach that works well even when selling standardised electronic components," says Stahl.

The Finnish firm was buying three chips from three different suppliers for its mobile phones due to the multiple standards common at the time.

Stahl wanted to solve the three-chip logistics problem for Nokia, and so he designed a single baseband device compatible with all three analog standards.

His firm also designed more power-efficient chips.

He took Swiss engineers specialised in extremely low power integrated circuit designs for the watch industry to Espoo to make chips "light years ahead of the rest of the industry".

By 1992, the company had grown to 10 employees when Stahl got the news that the foundry, called Micronas, (his firm used to manufacture its chips), was being shuttered.

Nokia, the ultimate owner of the foundry, was in the process of a massive restructuring effort.

Stahl went to Technologieholding, a German venture capital firm that has since been acquired by 3i, and asked for its support. The next day, he flew to Espoo.

Upon a successful sale, he became the CEO of a 135 person company with five unions. He took the name of the acquired company, Micronas.

"Your average owner-manager of a Swiss startup would not take a flight to Finland and make a deal with Nokia to acquire a sinking semiconductor division," comments Swiss-born, Thomas Flohr, co-founder of Comprendium, a London based software firm.

A victim of success

In 1993, Micronas' became a victim of its own success. Nokia loved its chips and wanted them in volume, but the tiny company could not deliver. Stahl asked Nokia to give him two weeks.

Back to the VCs he went. With some capital from the firm and bank loans too, he acquired another struggling firm, this time a Swiss one that could produce the chips in the numbers required.

At that point, Micronas had also become a public company. The next hurdle Stahl faced was the stock market analysts who felt the company was too dependent on Nokia.

Stahl's solution was to acquire ITT Intermetall, a German chip manufacturer, to expand the customer range.

But all the investment banks that had lined up to back his company for the IPO now shrunk back from the plan to acquire a firm four times its size - one that was losing money.

There was a scramble to find the capital. The public turned against the firm and the stock price fell to a fraction of its IPO price.

But Stahl prevailed.

He knew the acquisition target was a good one. After selling much of his personal shareholdings to back the transaction, he signed a deal with Comdisco for an operational lease to manage the capital shortage.

The decision to lend to Micronas was a risk for Comdisco, admits Flohr who was running the European arm of that company at the time.

But it paid off.

"Stahl delivered better than promised within 24 months," says Flohr.

Public and investors demand blood

Shortly afterwards, Stahl was forced to step down. Viktor Dammann who was the Vontobel analyst covering the stock at the time says that Stahl fought to stay at the helm of his company.

Stahl says that he felt responsible for the investors who had bought shares that had so abruptly lost value. So he turned over the day-to-day management to Wolfgang Karlsbach, who still runs the firm today.

For a short while Stahl was an active chairman of the board but the public was still not satisfied, so he cleaned out his desk and is now a non-executive board member.

In retrospect, the Swiss says he took the company public too early and management was spread too thinly.

"For me going public was never a goal in itself. The question was, how am I going to finance the company," he explains.

The learning curve

"Everyone in Europe was learning back then. Not too many analysts or journalists at that time even understood the semiconductor business. Plus tech oriented investor relations firms were non-existent," he says.

"Ultimately, such changes in management in high tech companies are necessary once they reach a certain size, especially in high growth firms," says Stahl who believes today that his skills are best put to use in working with early stage firms.

Investors and managers who have worked with him describe him as hard working, pragmatic and a no nonsense negotiator. He is confident and certainly not afraid of taking a risk. But he is not reckless. He'll tell you all the risks he took were finely calculated.

He plans to spend time in 2003 as an active business angel.

He has no plans to retire, although he could afford to spend more time with his son and wife of 22 years. She is still working part time at a Swiss bank.

swissinfo, Valerie Thompson

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