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LSI drops consumer chip biz, trims workforce

Posted: 29 Jun 2007 ?? ?Print Version ?Bookmark and Share

Keywords:consumer chips? workforce cut? consumer business?

Amid a move to cut 13 percent of its workforceequivalent to 900 jobsLSI Corp. has sold its consumer chip business to Magnum Semiconductor Inc. The transaction will be funded by private equity investment.

Under the terms of the agreement, Magnum will purchase the LSI DoMiNo, Domino and Zevio architectures, products and related IP of the LSI consumer products business. Additionally, Magnum will offer employment to a significant number of LSI employees associated with the sold off business.

The sale of the consumer products business will enable LSI to focus investments on its businesses in the storage, networking and mobility market segments. Financial terms are not being disclosed.

The definitive agreement is the result of an ongoing strategic review within LSI of its business portfolio following its merger with Agere Systems on April 2.

As part of its cost savings, LSI announced that it will eliminate approximately 900 positions or about 13 percent of its non-production workforce across all business and functional areas on a global basis.

In a statement, Abhi Talwalkar, LSI president and CEO, said, "Today's actions will position the company to improve our gross margins in our semiconductor business and to grow profitably in a competitive, fast-changing market."

The company also updated its outlook for the second quarter ending June 30, 2007 and revised its estimated revenue range to between $650 million and $670 million. Non-GAAP earnings are expected to be between minus $0.03 and $0.00 per diluted share in Q2 primarily due to lower than expected revenues, partially offset by strong expense control and favorable product mix.

GAAP loss is expected to be between 52 and 43 cents per diluted share, noting that the company is in the process of determining the exact amount of charges it will recognize in the second quarter.

"Our revised outlook for Q2 reflects greater than anticipated softness in our businesses," he said.

- Mark LaPedus
EE Times

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