& cplSiteName &

More Cuts at PMC-Sierra

Light Reading
News Analysis
Light Reading
1/17/2003
50%
50%

The wheel of layoffs has come full circle, as PMC-Sierra Inc. (Nasdaq: PMCS) -- one of the first semiconductor companies to make major cuts at the start of the downturn -- is having another go.

PMC executives announced yesterday they'll be cutting 16 percent of the company's 1,099 employees, slashing annual expenses by $25 million to $28 million (see PMC-Sierra to Cut Another 16%). Charges related to the restructuring will appear in PMC's earnings statements for the March and June quarters of 2003.

PMC also announced it would write down $20 million to $25 million related to the decreased value of venture investments, inventories, and some fixed assets.

The announcement came late yesterday afternoon, possibly because Wall Street rumors about the restructuring had spread during the day. PMC officials were not immediately available for comment.

Analysts weren't surprised by the layoffs, saying it was apparent that PMC was going to need an extra nudge to become profitable.

"According to published numbers, the company was not going to break even until 2004," says Arnab Chanda, analyst with Lehman Brothers. "This just tells you the business has not improved, and it's going to be tough for a while."

"Bob Bailey [PMC's CEO] has always been forthright about this," says Jeremy Bunting, analyst with Thomas Weisel Partners. "He was saying, 18 months or two years ago, that he'll do anything it takes to make the company profitable."

Analysts give PMC credit for being one of the first companies to react early and swiftly to the downturn, the other being JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU). In 2001, PMC rethought some of its pricey acquisitions of the previous two years, halting future development of the TinyTera switch fabric from Abrizio and scuttling products from Extreme Packet Devices and Malleable Technologies.

The hope had been to reach profitability by the first quarter of 2003, but the market hasn't cooperated. "Early in '02, there was an expectation that some of the metro stuff was going to move, but that hasn't happened," Bunting says. "As we enter into '03, telecom continues to be moribund."

There's an interesting contrast between PMC's approach and that of TranSwitch Corp. (Nasdaq: TXCC), which announced layoffs of 25 percent yesterday (see TranSwitch Q4: Losses, Layoffs). While PMC dropped products, TranSwitch did the opposite, taking on more R&D costs with the acquisitions of Onex and Systems on Silicon Inc. (see TranSwitch Harvests Startup, TranSwitch Buys Systems on Silicon, and Onex Chip Sees Light of Day).

Of course, TranSwitch made cuts too – a total of 133 employees during 2001 and 2002. But the effect on expenses hasn't been the same. Bunting's numbers show that during the downturn, PMC's revenues fell as much as 77 percent from their peak, while TranSwitch's fell 94 percent. But PMC's operating expenses dropped as much as 44 percent from their peak, while TranSwitch's dropped only 12 percent.

"In a sense, TranSwitch moved to preserve technology by putting it on the op-ex [operating expenses] line," Bunting says. "By contrast, PMC is being bolder and more strategic in cutting off technology development that it didn't feel could deliver near-term return on investment."

It's unclear if PMC will cut any major product lines this time around, but CEO Bailey did hint at what's untouchable. His prepared statement yesterday said he wants to "strengthen development efforts in MIPS processors, high-speed mixed signal [i.e. chips mixing digital and analog functions], and sub-90 nanometer design."

Details of PMC's restructuring will be revealed in the company's earnings conference call, scheduled for Jan. 23.

— Craig Matsumoto, Senior Editor, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
aardvark
50%
50%
aardvark,
User Rank: Light Beer
12/5/2012 | 12:51:07 AM
re: More Cuts at PMC-Sierra
If there's one thing these guy's know how to do (apart from damm good silicon) it's metormorphise.

And it will be faster than we think.

Watch out for HQ going south of the 49th.

Sierra = Modems = early 90's
PMC = WAN (ATM/SONET..) = late 90's
QED = MIPS = 2000 and on
jackall
50%
50%
jackall,
User Rank: Light Beer
12/5/2012 | 12:51:03 AM
re: More Cuts at PMC-Sierra

I guess this puts Kevin's Ford Taurus back down
to a sensible price range, eh ?

heh heh heh.

Couldn't have happened to a nicer guy.
stinglikeabee
50%
50%
stinglikeabee,
User Rank: Light Beer
12/5/2012 | 12:51:01 AM
re: More Cuts at PMC-Sierra
Anyone have details on projects or sites that were closed up? Any directors or execs let go?

TIA, SLAB
aardvark
50%
50%
aardvark,
User Rank: Light Beer
12/5/2012 | 12:50:44 AM
re: More Cuts at PMC-Sierra
I heard a rumour the Maryland RND office was closed. Also a sales office in Europe.

Any other feedback
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
Masergy: It's Time for SD-WAN Options

6|28|17   |   03:09   |   (0) comments


Paul Ruelas, director of network products for Masergy, explains how adding SD-WAN has changed the service mix for his company's customers. In some cases, the change is incremental, enabling more granular customer control. Masergy's newest version, SD-WAN Go, gives up some of those controls for a streamlined version targeting mid-sized customers with the most ...
Women in Comms Introduction Videos
Intel Ushers in the Revolutionary 5G Era

6|28|17   |   5:00   |   (1) comment


5G will bring job opportunities for women in telco and IT, as well as a whole new era of communications for consumers and industries of all kinds, says Caroline Chan, vice president and general manager of the 5G Infrastructure Division at Intel.
LRTV Custom TV
VeEX at ANGA COM

6|27|17   |     |   (0) comments


At ANGA COM 2017, Cyrille Morelle, president and CEO of VeEX, updates Alan Breznick with VeEX's new products and technology. This includes VeSion cloud-based platform for network monitoring, AT2500-3G advanced spectrum analyzer and MTTplus-900 WiFi Air Expert module. He also comments on DOCSIS 3.1 deployment and Remote PHY technology.
LRTV Custom TV
The Overall Objective Is to Win the Game

6|26|17   |     |   (0) comments


SCTE•ISBE's Chris Bastian discusses Energy 2020's success to date and the importance of a flexible approach that allows for changes in specific strategies in order to reach significant milestones.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Does AT&T Deserve Time Warner?
Mari Silbey, Senior Editor, Cable/Video, 6/23/2017
Hulu Is Greatest Threat to Pay-TV Providers – Study
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 6/27/2017
Calix: Russo's Not-So-Overnight Success?
Carol Wilson, Editor-at-large, 6/28/2017
Verizon Takes 'One Fiber' to More Cities
Mari Silbey, Senior Editor, Cable/Video, 6/22/2017
AT&T Expects 5G in Late 2018 or Early '19
Dan Jones, Mobile Editor, 6/22/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.