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Texas Instruments Executive Wants to Go Hollywood

Rich Templeton is pitching its digital light processing trademark projectors and TVs to studios and theaters.

March 15, 2004|From Bloomberg News

Rich Templeton, who helped build Texas Instruments Inc. into the world's largest maker of mobile phone chips, has his sights on Hollywood.

Templeton, who takes over May 1 from Chief Executive Thomas Engibous, who will remain chairman, is planning to exploit what he says will be the next step in cinema: digital movies. He's pitching Texas Instruments' digital light processing trademark projectors and televisions to Hollywood studios such as Warner Bros. and theater chains including AMC Entertainment Inc.

"We will find the customers and give them what they want," Templeton said in an interview at the company's Dallas headquarters.

Templeton, 45, wants digital light processing, or DLP, to be as ubiquitous as Dolby surround sound in movie theaters. Texas Instruments is boasting that movie projectors and televisions with DLP have longer lamp life and richer colors than competing products such as plasma screens. The consumer electronics market is estimated at more than $100 billion this year in the U.S. alone, according to the Consumer Electronics Assn.

The push to consumer electronics will help Texas Instruments record its highest quarterly sales in more than three years in the first quarter. The company said that rising demand for chips going into everything from cellphones to digital televisions, projectors and cameras would boost sales to as much as $2.95 billion.

"Their chips are showing up everywhere," said Matt Kelmon, who helps manage $500 million at Kelmoore Investment Co. in Palo Alto. "I spend a lot of time going to Best Buy, and I'm seeing them in more and more products."

With DLP, Texas Instruments is harking back to another consumer success. Fourteen years ago the company popularized the graphing calculator, used for calculus, that now dominates America's high schools. It's seeking to do the same with DLP TVs and other products.

Templeton is pushing his product in Tinseltown alongside "Star Wars" director George Lucas and Steven Soderbergh, who directed "Ocean's Eleven," both of whom are prodding studios to make and distribute more digital movies. Lucas's 1999 "Star Wars" movie, "Episode 1: The Phantom Menace," was the first commercial digital movie made. More than 55 movies have been made in the format since then, Texas Instruments said.

The position is an unlikely one for a company used to burying its chips in other companies' products, Templeton said.

"We're a technology-oriented company and most of us are engineers," he said. "Our customers in the cellphone business don't have an interest in our brand."

Texas Instruments is slapping the DLP logo on televisions and advertising jointly with customers to increase its recognition. The logo was featured for the first time in ads for Samsung Electronics Co. TVs. DLP projectors were used at the Academy Awards this year.

DLP was originally conceived for missile tracking systems in the 1970s and spent two decades in Texas Instruments labs in various iterations, said Doug Darrow, a DLP manager.

DLP uses 1.3 million microscopic mirrors to reflect an image onto a screen. Each mirror is less than one-fifth the width of a human hair.

Another Templeton project is digital cameras, which outsold film cameras for the first time last year. Seven of the 10 biggest digital camera makers use Texas Instruments' chips, said David Pahl, manager of its imaging business, in a February interview.

Profit this quarter will be 19 cents to 22 cents a share on sales of $2.84 billion to $2.95 billion, Texas Instruments said last week. The company had predicted profit as low as 16 cents and sales of as little as $2.72 billion. Analysts expected 19 cents and $2.85 billion, the average estimate in a Thomson First Call survey.

Mobile phone chips have led growth. Templeton downplayed Intel Corp.'s contention that phones are becoming computers that need a Pentium's processing power to run the applications.

Intel has spent more than $1 billion on acquisitions and research to create its wireless business.

"At the end of the day, people are most concerned about whether their phones are good at being phones and whether the other applications are also easy to use," Templeton said.

Devices such as DVD players, stereos and digital televisions increasingly rely on semiconductors that perform those conversion functions and also share music, movies and data with other machines in the home without adding more cables, Templeton said.

Templeton, an engineer from Poughkeepsie, N.Y., who graduated from Union College in nearby Schenectady, chose a job in Texas Instruments' sales-training program in 1980 over offers from IBM Corp. and Digital Equipment Corp.

He was recruited into the microprocessor group less than two years later. The unit had lost sales to Intel and labored in the shadow of more-successful units that filled Department of Defense contracts and sold scientific calculators, said Templeton and other executives.

Mentor Graphics Corp. CEO Walden Rhines, 57, who then ran Texas Instruments' microprocessor group, lobbied to steal Templeton.

He remembers a call he got a decade later from Templeton's supervisor, who said Templeton was his future boss and told Rhines: "He might be your boss too."

Templeton isn't the only one chasing consumers. Intel showed a chip named LCOS in January at a trade show in Las Vegas and sees consumer electronics as a way to diversify sales.

That has Templeton pushing some marketing changes at Texas Instruments. Customers such as Nokia don't put its logos on their phones, but Samsung's TVs with the chips do. Templeton can't afford to let his guard slip in cellphones either, investors said.

"Intel's always there, and sooner or later they will get it right" on mobile phone chips, said Brett Crawford, who helps manage $5.5 billion, including Texas Instruments and Intel shares, at Mesirow Financial in Chicago. "Templeton's just got to hope it doesn't happen on his watch."

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