Micron president shoots high
Even before Micron Technology bought TI's memory business, Micron Electronics' new president had his hands full with revamping the PC maker.
As Micron Technology builds itself into a market Goliath by purchasing Texas Instruments' memory chip business, the new president of Micron Electronics, the parent company's PC offshoot, is also in the throes of revamping its PC business to compete with its formidable adversaries in direct PC sales, Dell Computer and Gateway.
Kocher, who came to Micron Electronics ("Micron") earlier this year, is building up an impressive history of charging into companies and making them over in short order. He arrives after a brief but intense stint as the president and chief operating officer of former Macintosh clone maker Power Computing. Before that, he was the president of worldwide sales, marketing, and service at Dell.
And less than six months after joining Micron, he is already claiming major progress. In January, before Kocher came aboard, Micron had 39 days of PC inventory. He has whittled this down to 10 days at the end of second quarter, about 3 days more than low-cost leader Dell carries.
"We're running as efficiently as anyone now," Kocher said in an interview with CNET NEWS.COM. But despite the improvement in this critical metric, Micron will have a tough time digging itself out of its second-class status and third-place ranking behind direct-sales giants Dell and Gateway. "It's like they're on the platform and just jumped on the last car as it's leaving the station," said Roger Kay, an analyst at International Data Corporation.
If that analogy rings true, it's no obstacle to Kocher. "Hey, I was at Dell when all of that was going on," implying that Micron could rise just as the PC giant did.
(Micron Technology, which is traded on the NYSE under the symbol MU, spun off Micron as a separate, majority owned subsidiary in 1995. Micron Tech owns 64 percent of Micron, which is traded on Nasdaq under MUEI. Steve Appleton is the CEO of Micron Tech. Joe Daltoso is the CEO of Micron).
Kocher showed his mettle at Micron in a big way in May when he halted construction of a huge PC assembly plant. "This was supposed to come on line in May. I stopped it," he said. He said he took a look at how it was being constructed and quickly determined that it was being built to handle too much inventory.
For PC assembly, he said, one of the most important yardsticks of success is the cash conversion of components--in other words, how quickly the various PC components, such as memory chips and hard drives, are turned into money. "In the cash-conversion cycle, we're now the industry leader," he said.
To demonstrate its newfound competitiveness, Micron plans to launch a major program in August. The upshot: the company needs to become a market force in workstations and servers, the highest profit margin computer segments.
"We will reenter the workstation market," he said. Micron is planning a powerful line, he added. Ironically, this is Dell's fastest growing product segment.
The company is also planning a big new push into servers at that time, Kocher said, a market where it is currently a small player. Both Dell and Gateway are putting considerable resources into building up their server lines, another high-profit margin segment. Micron purchased server maker Netframe last year but has yet to make a real dent in the market.
Kocher said that the principal target markets are medium and large businesses. But even his extreme zeal is tempered by market realities.
Kocher also realizes that some markets are already taken by companies like Compaq and Dell. "The Fortune 200? That war's over, and we weren't even invited," he said.