National Semiconductor is closing its cellular baseband business unit, resulting in the loss of approximately 340 positions worldwide as well as charges of approximately US$25 million ($42.2 million) to US$30 million ($50.6 million) in the fourth quarter ending May 25, 2003.
As previously announced, the company is also seeking to sell its Information Appliance (IA) unit, which consists primarily of the Geode microprocessor family.
Both moves come as a result of National’s push to streamline cost structures and enhance shareholder value by prioritising R&D spending on the company’s higher-margin analogue businesses. These profit-improvement activities are expected to net approximately US$30 million per quarter, or US$120 million ($202.5 million) annually. The Geode product family and baseband businesses account for less than 5 percent of National's total revenue.
"We are moving quickly to execute our plans to provide higher returns sooner to shareholders," National’s CEO Brian Halla says. "These steps increase our operating margins as we focus our investments in National's high-value, high-margin analogue products such as power management, portable power, displays, audio and op amp solutions."
In addition to divesting and/or closing business units, National has also revised its technology and manufacturing agreement with Taiwan Semiconductor Manufacturing Corporation (TSMC) in Q3. The company also reduced its workforce by 500 in Q3 and 340 in Q4, for a total of 8 percent of National's workforce.
Approximately US$15 million ($25.3 million) of the US$30 million in planned quarterly cost savings was achieved through actions implemented in the third quarter. The actions announced today will provide an additional US$9 million ($15.2 million) to US$10 million ($16.9 million) towards the US$30 million target. The remainder would be achieved upon completion of the sale of the Information Appliance business unit.
National also indicated that it has not changed its revenue guidance for the fourth quarter. The original guidance in March was for fourth quarter revenues to increase 4 to 7 percent from the third quarter, equating to a range of approximately US$420 million ($708.8 million) to US$432 million ($729 million).
National Semiconductor is distributed in Australia by Arrow Electronics and Insight Electronics.