Cirrus: Losses mean layoffs

Cirrus Logic (CRUS) has announced it will cut 15 percent of its workforce as part of its effort to focus on core products and edge back towards profitability.

The measures came as Cirrus posted results for the final quarter of fiscal 1997. The microchip maker saw a net loss of $51.9 million, or a 79 cents a share, compared to a loss of $88.4 million, or $1.38 cents a share, during the same period last year.

The company's stock sunk past its 52-week low in early trading today, losing over 10 percent from yesterday's close of 10-1/8.

The results of operations for the fiscal year and the quarter, which ended in March, include a restructuring charge of $21 million largely attributed to layoffs and writing off excess assets and facilities. Operations results also include charges of $34.5 million, due to anticipated manufacturing capacity changes and some inventory write-downs.

Excluding these charges, the company said, it would have reported a loss from operations for the March quarter of approximately $1.5 million.

Wall Street had expected a profit of 8 cents a share, according to First Call.

This quarter's big loss follows three quarters of growth, including two consecutive quarters in the black.

Fourth-quarter revenue took a hit. The company reported $212.9 million in revenue, down from $233.1 million recorded for the same quarter last year.

The company posted a 20 percent drop in revenue for fiscal 1997 and a growing net loss, but added it is cutting costs and divesting non-core businesses as it works to "reinvent" itself.

For the year Cirrus reported revenue of $917.2 million, down 20 percent from $1.15 billion the previous year. And net loss grew to $46.2 million, or 71 cents a share, compared to a net loss of $36.2 million, or 58 cents a share, a year ago. In an attempt to pull out of the red, the company has reorganized into four market-focused divisions, will outsource its production testing and consolidate certain corporate functions, and has begun a "workforce reduction" of approximately 400 employees, representing about 15 percent of worldwide staff.

The four new divisions are Personal Computer Products, Communications Products, Mass Storage Products, and Crystal Semiconductor Products. Cirrus has also established an office of the president.

The company said that its recovery has proceeded more slowly than expected due to a drop in demand for its 2D Graphics products, a slower than expected takeoff of its Laguna 3D/AGP (Accelerated Graphics Port) chip solution due to industry delays in ramping AGP-based systems, and a shortage of read heads in the disk drive industry.