PMC-Sierra Closes Sites, Cuts Staff
Chip vendor PMC-Sierra Inc. (Nasdaq: PMCS) is closing two R&D sites and axing 175 staff in a bid to cut its annual operations expenses by up to $24 million, the company announced late Thursday. (See PMC-Sierra Cuts Back.)
The company will close its research centers in Winnipeg, Manitoba, and Saskatoon, Saskatchewan, which will result in the loss of 175 jobs, nearly 15 percent of the company's total workforce of 1,183. That move should save the company $20 million to $24 million per year in operating costs, it said.
The restructuring measures, which will cost PMC-Sierra $12 million to $14 million, should be completed by the end of September, according to the news release.
The chip vendor's stock closed down 22 cents, about 3.4 percent, at $6.30 Thursday, just before the announcement was made, but regained the exact same amount in after-hours trading following the news.
However, that's still near the lower end of its 12-month share price range of $4.78 to $13.77. The firm's stock suffered a 25 percent drop in July 2006 following a worse than expected performance from its PON (passive optical networking) chip business, where the competition is continuing to intensify. (See PMC-Sierra Sinks on PON Outlook, Cortina Buys a PON Plan , and Mindspeed Joins GPON Race.)
The company, which appointed a new CFO earlier this month, is looking to tighten its belt after recording a net loss of nearly $100 million on revenues of $425 million in 2006, though about $49 million of that loss was the result of a one-time tax-related charge. (See PMC Names CFO.)
Now PMC-Sierra is trying to look ahead, and says revenues for the first quarter of 2007 are due to be in the middle to high end of the $98 million to $105 million range it provided in January. On average, analysts are expecting revenues of $101.7 million for the first quarter, and sales for the full year of $437.5 million.
— Ray Le Maistre, International News Editor, Light Reading