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SonicBlue axes third of workforce

Desperate bid to get into profitability

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SonicBlue, the company launched on the back the emergence of the Internet appliance business that has... er... yet to emerge, has rid itself of 30 per cent of its workforce.

The company currently employs 813 people around the world. That will be reduced by around 244 workers, a move that will cost SonicBlue $120 million.

That figure also includes inventory write-offs. We'd hazard a guess that much of it will be unsold Diamond Mako PDAs. SonicBlue launched Mako last autumn following a deal with UK PDA maker Psion. Since then the device has entirely failed to set the market alight.

Meanwhile, its information appliance biz has been forced to shift its focus away from the consumer space and target "vertical markets". Only its Rio division is proving truly popular, and we wonder why the company doesn't focus on it exclusively. Its ReplayTV acquisition may help, but if ReplayTV couldn't make it on its own against TiVo, we can't see how it will fare any better as part of SonicBlue.

SonicBlue's plan is to get into the black and a positive cash flow early next year. In addition to the redundancies, it wants to sell off half of its stake in Taiwanese chip foundry UMC. If successful, that will net it around $500 million.

SonicBlue was formed last year when graphics chip maker S3, having bought peripherals company Diamond Multimedia, then sold off its chip business, effectively leaving Diamond with a new name and new management team. ®

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