Entropic Cuts Staff Again
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 7/8/2013
The San Diego-based chip maker, which announced the fresh round of staff layoffs just before the Independence Day holiday last week, also released a gloomy warning about its second-quarter earnings. Entropic said it now expects its second-quarter revenues to come in at about US$70 million, right at the low end of its original financial guidance. In addition, the company, which will report its spring quarterly earnings on July 31, reaffirmed its earlier guidance that it will roughly break even in the quarter on a non-GAAP basis.
Entropic, which anticipates that the layoffs will generate about $9 million in annual cost savings, said the cuts are part of "a restructuring plan designed to refine business operations with the goal of driving long-term profitable growth." In a press release, the company said it is "making strategic organizational changes across its marketing and business operations to focus on key vertical markets, streamline global manufacturing resources and consolidate several engineering activities."
Entropic President and CEO Patrick Henry added that the restructuring "also gives us an opportunity to increase investment in strategic areas with more long-term growth potential, including analog mixed signal and software." Entropic signaled a move in that direction last month when it bought Mobius Semiconductor, which produces low-power analog mixed signal semiconductors, for $13 million.
Entropic said it expects to wrap up the restructuring and layoffs largely within the next month. It will incur $1.7 million in pre-tax GGAP charges in connection with the moves.
The latest layoffs and restructuring follow Entropic's layoffs of 40 employees, or 6 percent of its global workforce, in December. They also follow Entropic's acquisitions of set-top box chip maker Trident Microsystems and the intellectual property of satellite TV chip maker PLX Technology last year as the company shifts away from its heavy reliance on MoCA-based chips for cable home gateways. (See Entropic Cuts 6 Percent Amid Growing Pains.)
— Alan Breznick, Cable/Video Practice Leader, Light Reading