Plans to implement a series of cost reduction measures
Standard Microsystems, a semiconductor company providing connectivity systems spanning analog, digital and mixed-signal technologies, has announced a reduction in worldwide personnel of 5-10%, including a voluntary retirement incentive for most employees 55 years of age and older.
Standard Microsystems (SMSC) is also planning to implement a series of additional cost reduction actions including: discretionary spend reductions, including travel, recruitment fees, consultants, temporary employees and other services; reduction of compensation expenses including deferral of merit increases and adjustments to the management bonus plan; restricted capital spending; strict management of working capital, including an inventory reduction program with extended test floor shutdowns and reduced material purchases.
The company estimates that these actions will result in a reduction of its expenses of approximately $6m to $7m a quarter compared to the third quarter of fiscal 2009 run-rate.
Two-thirds of the total savings are anticipated to be realized in operating expenses and the balance in cost of goods sold. The company anticipates benefits from these cost reductions to start in the fourth quarter of fiscal 2009 and be fully realized during the first quarter of fiscal 2010. The restructuring charges are expected to be in the range of $3m to $5m, primarily recorded in the fourth quarter of fiscal 2009.
Christine King, president and CEO of SMSC, said: We are managing our business to reduce capital and operating expenses to maintain a cash neutral position while end customer demand is weak. While reducing costs to meet current revenue levels, we will continue to focus on driving market share and revenue growth. At this time, we continue to believe that our first quarter revenue for fiscal year 2010 will be sequentially higher based on bookings and customer forecasts.