LSI announced a broad restructuring that will include the elimination of approximately 900 positions, or about 13 percent of its non-production workforce, across all business and functional areas on a global basis. The restructuring follows LSI’s recent acquisition of Agere Systems in April 2007.
LSI has also agreed to sell its consumer products business to Magnum Semiconductor for an undisclosed amount. The deal includes the LSI DoMiNo, Domino[X] and Zevio architectures, products and related intellectual property of the LSI consumer products business. Additionally, Magnum will offer employment to a significant number of LSI employees associated with the business. Magnum Semiconductor said the acquisition strengthens its existing DVD, digital TV and digital entertainment center solutions while also adding MPEG-2 and H.264 high-definition media processing and low-power 3D graphics products to its portfolio.
Regarding the restructuring, LSI said the job cuts are expected to reduce its non-GAAP operating expenses to between $255 million and $265 million in the third quarter and to between $245 million and $255 million in the fourth quarter of 2007. The corresponding GAAP operating expenses are expected to be between $290 million and $310 million for the third quarter of 2007 and between $275 million and $295 million for the fourth quarter of 2007. The quarterly operating expense run rate exiting 2007 is inclusive of all previously announced synergies and cost savings. The company expects to make further progress on operating expenses in 2008.
LSI 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 ($0.03) and $0.00 per diluted share in the second quarter 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.
LSI said the revised outlook reflects greater than anticipated softness in its businesses but that it remains confident in its long term direction.
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