Job cuts hit Freescale earnings
Freescale, Motorola's one-time semiconductor division, yesterday said it just about made a profit during its fourth quarter of fiscal 2004 as sequential revenue growth collapsed and redundancy costs slashed the bottom line.
The chip company also announced the loss of its manufacturing chief and of the executive who steered Freescale to independence from its parent.
Q4 FY2004 yielded revenues of $1.43bn - exactly the same as Q3 FY2004 but four per cent up on the Q4 FY2003's $1.37bn. Net income for the quarter was a paltry $5m (one cent a share), well down on the $57m Freescale earned last quarter and the $98m it made in Q4 FY2003.
Freescale blamed the fall on restructuring costs of $79m and a further $5m arising from its split from Motorola. Some 1000 jobs were axed during the quarter, costing more than anticipated - it previously forecast the move would require a $65m charge. It will spend another $10m on restructuring in Q1 FY2005, it warned.
One casualty of that restructure are the company's COO and president positions, both jointly held by Scott Anderson. He says the time is right to "move on [now that] Freescale is firmly established as a fully independent company". Motorola is not seeking a replacement.
Anderson spent 27 years working for Motorola and Freescale, and was instrumental in steering the latter from its role as Motorola division to separate entity. Initially president and CEO, he took the COO role in May 2004 after appointing IBM Microelectronics' Michael Mayer to the CEO post.
Gone too is Chris Belden, Freescale's manufacturing chief, to be replaced by Alex Pepe, currently head of the 32-bit embedded controller division of the company's transportation and standard products group.
For the year as a whole, Freescale achieved net income of $211m (62 cents a share), compared to 2003's $366m loss. Revenue was $5.72bn, up 17.7 per cent from 2003's $4.86bn.
For Q1 FY2005, Freescale expects revenues of $1.38-1.47bn, with pre-tax separation expenses of around $10m and new restructuring charges of approximately $10m. ®
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