Pasquale Pistorio has a knack for coming out on top. But last year was a majestic performance.
As chipmakers from Silicon Valley to Tokyo endured the industry's worst year ever, STMicroelectronics (STM) was one of only three of the top 10 semiconductor companies to post a net profit, together with Intel (INTC) and Samsung. And although STMicro's revenues fell by 19.4%, to $6.4 billion, that was far better than the 33% drop the industry averaged. The Franco-Italian chipmaker also boosted its global market share to 4.2%, rising from No. 6 to No. 3. Only Intel and Toshiba (TOSBF) are larger.
That's a great achievement for a company that once seemed doomed. When Pistorio left Motorola Corp. in 1980 to take over a loss-plagued state-owned SGS Group, Italy's only microelectronics company, few thought it could be salvaged. A merger in 1987 with the equally moribund French chipmaker Thomson Semiconductors made the task more challenging. But by 1994, Pistorio was churning out steady profits and grooming STMicro for a listing on the New York Stock Exchange.
An industry veteran, the Sicilian-born Pistorio, 66, made his mark by betting big on the chips needed for such digital products as cell phones, networks, and cable-TV set-top boxes. "He looked into the future and saw these applications would grow," says Andrew Norwood, semiconductor analyst at Gartner Group in London.
His strategic partners include Nokia (NOK), Nortel Networks (NT), and Robert Bosch. But Pistorio isn't complacent. He sets aside 10% of annual operating profit for research into futuristic technologies with no immediate payoff. That's on top of the 15% of total revenues he allots to regular research & development. "Companies that work only for today will not have a tomorrow," he says.
Pistorio's passion for his work is legendary. He often takes exhausted managers on midnight tours. He once assigned all top executives, including himself, to graveyard shifts to help convince union bosses that plants must operate around-the-clock to stay competitive. Pistorio plans to retire in 2005 to focus more on the environment, his other passion. He has already put his ideas to work: Energy and water conservation save STMicro $50 million a year.