LSI Logic is to cut 20% of its workforce and restructures operations. The move is intended to speed a return to profitability by 2nd half of 2002.
LSI Logic has announced a series of actions to reduce costs and tailor company expenses to current revenues, putting the company on track for its return to profitability in the second half of the year.
These actions include: restructuring Tsukuba, Japan manufacturing operations; divesting CDMA handset and DSL standard product business units and reducing the worldwide workforce by 1,400 positions or 20 percent.
These cost reductions are expected to reduce cost of sales and operating expenses by about $30 million per quarter. The company will take a related charge in the range of $50 million to $70 million in the first quarter of 2002 to cover these actions.
LSI Logic will meet its guidance for 2001 fourth quarter revenue growth of between 0-5 percent sequentially from the $397 million reported in the third quarter. The company will also meet its projection of pro forma fourth quarter loss of 23 cents, an improvement over the pro forma third quarter loss of 29 cents.
We believe that both our semiconductor component and storage systems businesses have bottomed and we expect our overall revenues to grow in line with the semiconductor industry this year, said Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. However, we are taking these actions to bring into line our cost structure with our present revenue stream and to return to profitability as expeditiously as possible.
We are emphasizing our core strengths and concentrating on those parts of the communications, storage and consumer electronics businesses where we have leadership positions, said Corrigan. At the same time, we have made the decision to divest our CDMA wireless handset and DSL standard product business units. We are in discussions to sell these businesses.
LSI Logic is consolidating its U.S. manufacturing activities and process R&D into the corporation’s Gresham, Oregon campus. Earlier, the company closed its Colorado Springs and Santa Clara manufacturing facilities. The company is restructuring its manufacturing operations in Tsukuba, Japan.
Bryon Look, LSI Logic executive vice president and chief financial officer, said the expanded cost-reduction program is designed to put LSI Logic on the fast track to positive cash flow and profitability.