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Thursday, March 1, 2012

CFO SPOTLIGHT – Alan Krock, InvenSense, Inc.

Alan Krock is vice president and chief financial officer of InvenSense, Inc. a multinational semiconductor firm based in Silicon Valley that produces motion sensors and gyroscopic technology for the mobile device industry. At InvenSense, Alan is responsible for financial reporting and accounting, human resources, facilities, information technology and investor relations. His career includes decision-making roles at other semiconductor firms including PMC-Sierra, Inc.; Integrated Device Technology Inc.; and at Rohm U.S.A. When Alan joined InvenSense last May, the firm was on the verge of registering with the Securities and Exchange Commission for an IPO that occurred in November 2011. In the following, Alan shares his perspectives on the financial organization, the IPO and the semiconductor business.

Q. You recently supported InvenSense through a successful IPO. Debrief us from the CFO perspective.

A. An IPO is a very important milestone in the development of any company and ours was no exception. We had one of the best performing IPOs of 2011 and our stock is up 110 percent since the offering. The proceeds provide us the opportunity to grow, expand our operations and reward all of our early investors and employees.

InvenSense had made a couple of previous attempts to go public, but the timing wasn't right. But the silver lining there was that there was a significant amount of documentation and experience inside the company when I arrived. Investor interest in our company is very high.

The investor relations (IR) component of the IPO was very enjoyable for me because we had to formulate our story and messaging in a compelling way and because analysts and investors who would be following us would need to really understand the linkages between us and the growing businesses we sell our products to. Equity analysts are knowledgeable and I learn a lot from them about the economic environment and their thoughts about the semiconductor industry.

Q. So, to continue that last thought, InvenSense is linked to the wildly growing mobile device market because it creates key components for smartphones and tablets. What is your outlook for growth in this market?

A. As you might imagine, it’s very positive. There are many companies making the adjustment to mobile applications. For instance, Google’s current work in location-based services which track locations of people using smartphones will grow. Gaming is another area where our products are in demand. Our motion sensors track the movements of people playing games, so we provide some of the guts for Wii for example.

But right now, our main driver is mobile devices where the growth in the attach rate for these products is very high. That attach rate will continue to grow as more people and businesses adopt mobile technology. This can drive our growth for the next 3 to 5 years.

Q. What would you like to spend the majority of your professional time doing?

A. I'd like to spend more time on strategic investing for our company. I like contact with the investment community as well. It is very important to me and the company that they clearly understand what we do and the drivers of our business so that our investment story makes sense to them.

Q. Do you outsource compliance or other task-oriented work that you are responsible for?

A. Yes, we outsource quite a bit of our daily compliance work, tax and some of our stock administration. Many of these duties have grown due to the fact that we became a public company and have to comply with more strict rules around financial controls. There is a lot of leverage to be gained from outsourcing these responsibilities. Not just that the tasks are accomplished, but with good accounting firms or other top-shelf resources you get a consultative dimension that includes best practices for these work streams.

Q. How do you influence business strategy at InvenSense?

A. I find the most effective way to influence strategy is to make sure you tie any opportunity to invest in products, people and technology to particular customer opportunities and markets. I' m energized when I play a lead role in the development of markets and the technology to capture opportunity.

Investor relations is also a strategic influence area in that the large institutional investment firms have great market data that I can leverage to search for opportunity. The perspectives of analysts are valuable because they know the emerging markets and can help me keep one eye on the horizon as I keep the other eye on the ball on a daily basis.

Q. Besides your IPO, how much are you involved in other change initiatives such as new systems, mergers & acquisitions and the like?

A. As CFO, I' m involved in essentially all company decisions from a financial perspective. I can influence decisions about where workers are hired and located. I also significantly contribute to the effort to ensure the company is properly positioned with respect to investors, customers and other stakeholders. In a previous position a marketing communications team reported to me and so I' m able to determine whether we are getting good value out of the significant spends on marketing, public relations and sales.

Q. Who do you admire in business and why?

A. I admire the thought leaders in any industry, those who really think through market opportunities and have the ability to move their companies into those opportunities. In our business there are many leaders. Then there are those that follow.

Q. What' s your take on the economy locally and nationally?

A. I mostly look at it as a closed ecosystem in Silicon Valley where the economy is improving rapidly - there will be far more jobs created here in 2012 and 2013 than in other parts of the country. I believe the rest of the nation will get back to a more normal, expansive economy in the next year or two. In the global economy, it will be more difficult. I' m always bullish on America' s prospects but change in some important industries in this most recent downturn will take longer to recover from. In the medium term, we’ll all be fine.


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