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Micronas exits consumer biz, halves workforce

Posted: 10 Feb 2009 ?? ?Print Version ?Bookmark and Share

Keywords:consumer business? digital TV? workforce layoff?

After seeing sales decline by 23 percent in Q4 alone, Micronas Holding AG has announced it will close down its consumer division, which mainly sells video processors for digital TV sets.

With sales of CHF396 million ($344 million), the consumer division is Micronas' largest segment, contributing two thirds to the company's total sales of CHF 598 million ($515 million). Since the outlook is "extremely uncertain" and no early recovery is in sight, the company sees no alternative to a deep cut.

While for some parts of the consumer business there are negotiations with potential buyers, the remainder of the division will be closed, the company said. "Our analysis has shown that in the face of the economic conditions and in particular also due to the high costs in R&D and marketing as well as due to the drastic price pressure it won't be possible for the consumer division to work profitably in the next few years", said Micronas CEO Wolfgang Kalsbach.

The move will affect 800 to 900 jobs worldwide, about 50 percent of the company's worldwide headcount. The lion's share of the job cuts will take place in Freiburg, Germany, where the company maintains a production line as well as R&D and administration activities. In addition, the production will be stopped during the second half of February.

Despite the abrupt decline in the automotive markets, the company plans to maintain its second main pillar. Micronas' automotive product spectrum includes Hall sensors used in hybrid drive vehicles and, generally in applications aiming at improving fuel efficiency. For this reason, the company had aired optimism at the opportunity of publishing itsQ3 08 results.

For FY 2008, Micronas sales dipped 16.3 percent to CHF 598 million ($515 million) resulting in a loss of CHF 52.5 million ($45.2 million). The net result, however, was much better than a year ago when the company wrote a loss of CHF 544 million ($468 million) on exceptional items. Consumer sales declined 20.5 percent to CHF 396 million. Also automotive saw sales decline, albeit at lower speed; the division achieved revenues of CHF 202 million, 6.1 percent below last year's level.

Even more alarming that the sales decline is the book-to-bill ratio: For the entire year, it dropped from 1.01 to 0.86. In Q4, it hit a record low of 0.7.

- Christoph Hammerschmidt
EE Times Europe

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