Conexant Systems Inc, the largest maker of chips for modems, plans to eliminate 6 percent of its workforce, or 450 jobs, because sales are expected to decline.
Conexant will take a pretax charge of US$475 million in its third quarter ended June 30. The jobs are manufacturing, sales and administrative positions, Chief Executive Dwight Decker said.
Conexant will contract silicon-chip manufacturing to widen profit margins, he said. The company will continue to make chips based on silicon germanium and gallium arsenide, which can offer better performance.
Conexant, whose chips also power mobile phones and computer-networking equipment, is getting fewer orders as customers use inventory. Analysts have been concerned about the US-based company's cash and sales outlook since it announced job cuts in March and lenders canceled a credit line in May.
Conexant shares rose US$0.74, or 10 percent, to US$8.09 on Monday. The stock had fallen 85 percent in the past year.
Conexant had US$438.5 million in cash, cash equivalents and marketable securities as of March 31. Less than 10 percent of the US$475 million charge is in cash, Decker said. He declined to say how much cash the company had at the end of June. The company won't have to draw on credit lines this year, he said.
Conexant said the fiscal third-quarter loss, excluding asset write-downs and amortization of goodwill from acquisitions, was US$0.45 a share. The average estimate of analysts surveyed by First Call/Thomson Financial was for a loss of US$0.43 a share.
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