Chipmakers PMC-Sierra, Conexant To Cut Jobs, Lower Estimates

ByBridgeNews Two more makers of semiconductors for the telecommunications industry are cutting jobs and warning of worse-than-expected results as weaker demand and inflated inventories drag down sales. PMC-Sierra Inc. and Conexant Systems Inc. issued the warnings Mar. 26 saying they will cut 13% and 20% of their work forces, respectively. PMC-Sierra said it will eliminate 230 positions as demand slows and customers cancel orders. The Santa Clara, Calif.-based company is consolidating several design centers. The company said sales will be only $118 million to $120 million for the period. Earnings per share will be 2 to 3 cents, far less than the 12 cents analysts had expected. For the fourth quarter, PMC-Sierra earned 24 cents per share on revenues of $232 million. Conexant said it will cut 1,500 jobs and post a bigger-than-expected loss for its second quarter largely because of weak demand and excess inventories. The company also plans to close several plants temporarily and reduce senior management's pay. The Newport Beach, Calif.-based company expects to lose between 35 and 40 cents per share in its second quarter, which ends in March. Analysts had forecast a loss of 24 cents per share. Revenues are expected to be between $246 million and $267 million, about 35% to 40% below the $410.4 million reported for the company's first quarter. "The slowdown in the global economy and the ongoing inventory correction is impacting virtually all of the communications end-markets we address," says Dwight Decker, Conexant chairman and CEO. Conexant also plans to split into two separate companies by the end of September. The personal networking business, which makes chips for mobile phones and television set-top boxes, will be spun off to shareholders as a new company that retains the Conexant name.