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Diamond to axe up to 180 jobs

Low-margin products dropped, focus shifts to proprietary technologies, inventory brought under control

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Diamond Multimedia is to cut 20 per cent of its workforce -- 180 jobs -- in a move to cut costs. It will also be trimming its product line, shutting some offices and attempting to tighten control of its inventory, both in-house and in the channel. In fact, Diamond originally hoped tackling inventory problems would be sufficient, but, as William J Schroeder, Diamond's president and CEO said, "we concluded further changes across the company were necessary to reduce our overall operating cost structure". Hence the job cuts. Diamond will also drop a number of its low-margin products. Schroeder didn't mention specifics, but its hard not to conclude that this means most of the company's consumer-oriented graphics cards will go. Schroeder said the company will instead focus on high margin, "more proprietary" (almost all of the consumer company's sounds and graphics cards are based on licensed technologies, such as Riva's TNT graphics engine and Aureal's 3D sound system) products, in particular professional 3D graphics cards for Unix and Windows NT, its HomeFree home-networking line and the Rio MP3 music player. The company expects the moves to cost $17-19 million, to be taken as a one-off charge on its Q4 results. ®

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