Melting flash-mem giant Spansion files for Chapter 11
Ex-CEO vows return of golden handshake
Melting flash-mem giant Spansion has filed for Chapter 11 bankruptcy, less than a week after suddenly axing 35 per cent of its workforce.
Meanwhile, Spansion ex-CEO Bertrand Cambou has vowed to return the $403,000 in severance he received after leaving the company in early February, telling a local newspaper he's "literally in tears" over the 3,000 workers cut loose without pay.
On Sunday, the company said it had filed for bankruptcy protection in an effort to "restructure its burdensome debt obligations and intensify its focus on market segments with greater profit potential." Those debt obligations come to $625 million.
"Given our focus on Spansion's future," reads a canned statement from new president and CEO John Kispert, "management and the board have concluded that Chapter 11 provides the most effective means for Spansion to preserve its business, meet its post-petition obligations and maintain customer confidence and continuity while we complete this restructuring."
Kispert replaced Cambou in early February, and although Cambou received a $751,000 golden handshake (plus a consulting gig), he has now rethought his severance in light of the recent layoffs, saying he will return all the money (minus what was taken by Uncle Sam).
"I hope they [Spansion] are going to take some of that money and give it to [those who were laid off]," Cambou told the San Jose Mercury News on Friday.
According to the paper, the 53-year-old has already sent a letter to the company's board of directors offering to return the money. "My heart is broken to see that a large amount of great people have been laid off without any severance," the letter read.
A Spansion spokesman tossed us the following statement: "We appreciate Dr. Cambou's symbolic gesture and his concern for the welfare of Spansion and its employees." Then he said the company was discussing the matter with the former CEO and president.
A joint venture of AMD and Fujitsu, the Sunnyvale, California-based Spansion is the world's third-largest flash maker. But its so-called NOR flash chips - intended for manufactures of cell phones and cars - are significantly less popular than the NAND flash chips manufactured by Samsung and Toshiba.
In the fall, Spansion heavily slashed employee pay, and on January 15, the company announced it was working to restructure its balance sheet - and perhaps sell itself - against the backdrop of a sinking worldwide economy. Then its Japan unit filed for bankruptcy. And on February 23, the company suddenly laid off 3,000 workers in the US and abroad - 35 per cent of its staff.
According to former employees speaking with The Reg, no US-based staff received severance pay, and hundreds had been on furlough for several weeks before the layoffs without pay.
Just weeks earlier, Cambou received $751,000 in severance after resigning, while inking a six-month consulting deal with the company. Cambou says that all but $403,000 of the severance went to taxes. And he hopes to return all of that $403,000.
Amidst the layoffs, the company's board of directors also voted to reverse earlier pay cuts for certain execs and other remaining employees. Three days later, two separate employment lawsuits were filed against the company, both of them claiming it had violated the Worker Adjustment and Retraining Notification (WARN) Act - a twenty-year-old US law that requires employers to provide 60-days notice before making "mass layoffs."
Spansion did not notify employees until the day they were laid off, but it claims an exemption under the WARN Act. It has not, however, specified what that exemption is.
Paula Rao was among the roughly 200 former employees who gathered at a Silicon Valley pizzeria on Thursday afternoon to protest the company's action and discuss the eventual lawsuits. A former engineer in the company's now-shuttered Sunnyvale R&D plant, she says Cambou deserves nothing but praise.
"I think that Bertrand should be acknowledged for what he did," she told The Reg. "I don't know if he knew when he left the company layoffs were on the horizon. Even if he did, he may not have known the details of how they would be handled. The fact that once he became aware of the situation, he had enough compassion to do what he did - you don't encounter many people these days that would have returned that much money by their own choice.
"I guess he felt he just couldn't keep it knowing the rest of us got nothing. I believe his gesture was from his heart and not motivated by trying to change his perception in the press."
Following its bankruptcy filing, Spansion says it will focus on embedded, IP-solutions, and wireless markets, as these have the highest profit potential.
"With our valuable portfolio of industry leading products and technology, we believe Spansion has a promising future," Kispert said. "By focusing on embedded Flash memory products, IP solutions, and the profitable portions of the wireless segment, we believe Spansion can leverage its diverse product portfolio and customer relationships while we continue our restructuring process and explore opportunities for a strategic transaction." ®