Product category: Communications ICs (Wired)
News Release from: National Semiconductor
Edited by the Electronicstalk Editorial Team on 28 May 2003
Baseband closure puts National on track
National Semiconductor says it is on track in implementing a series of strategic profit-improvement actions that were launched on 20th February 2003.
National Semiconductor says it is on track in implementing a series of strategic profit-improvement actions that were launched on 20th February 2003 These actions are designed to streamline National's cost structure and enhance shareholder value by prioritising R and D spending on higher-margin analogue businesses
This article was originally published on Electronicstalk on 5 Jan 2001 at 8.00am (UK)
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Total cost savings from these profit-improvement activities are expected to be approximately US $30 million per quarter, or approximately US $120 million annually.
As part of that plan, the company had indicated it would seek to sell its Information Appliance (IA) unit, which consists primarily of the Geode family of microprocessor products, and its Cellular Baseband business unit.
Approximately US $16 million of the US $30 million total targeted cost savings is related to the exit of the IA and baseband business units.
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The Geode product family and baseband businesses account for less than 5% of National's total revenue.
Since February, the company has conferred with several prospective buyers of the IA business unit and is actively pursuing a sale.
In the meantime, National continues to support existing customer programmes.
Although the company is engaged in discussions with potential buyers, it cannot give assurance that a sales transaction will take place.
In addition, the company is closing its cellular baseband business unit, with immediate effect.
In connection with these steps, the company is reducing its worldwide workforce by approximately 340 positions for the business units affected and related support functions as well as for various infrastructure reductions consistent with the company's overall profit-improvement objectives.
Because of these actions, the company will incur charges of approximately US $25 to US $30 million in the fourth quarter, which ended 25th May 2003, for severance and impairment of certain assets.
To date, under the profit-improvement plan, the company has: revised its technology and manufacturing agreement with Taiwan Semiconductor Manufacturing Corporation (TSMC) in Q3; reduced its workforce by 500 in Q3 and 340 in Q4, for a total of 8% of National's workforce (after these actions are completed, National will have approximately 9200 employees); and announced the closure of its cellular baseband business unit effective in Q4.
Approximately US $15 million of the US $30 million in planned quarterly cost savings was achieved through actions implemented in the third quarter.
The actions announced today will provide an additional US $9 to US $10 million towards the US $30 million target.
The remainder would be achieved upon completion of the sale of the Information Appliance business unit.
"We are moving quickly to execute our plans to provide higher returns sooner to shareholders", said Brian L Halla, National's Chairman, President and CEO.
"These steps increase our operating margins as we focus our investments in National's high-value, high-margin analogue products such as power management, portable power, displays, audio and op amp solutions".
National also indicated that it has not changed its revenue guidance for the fourth quarter.
The original guidance in March was for fourth quarter revenues to increase 4 to 7% from the third quarter, equating to a range of approximately US $420 to US $432 million.
An update about these strategic profit-improvement actions will be available on 5th June, when National Semiconductor announces fourth quarter and year-end financial results for its 2003 fiscal year.
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