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S3 hands out 100 pink slips

Multimedia acceleration hardware and software supplier S3, hit with stiff competition in the graphics chip market, lays off 15 percent of its workforce.

S3 (SIII), a multimedia acceleration hardware and software supplier that has been hit with stiff competition in the graphics chip market, today laid off 15 percent of its workforce, the company announced.

The cuts, which will trim 100 positions, are being leveled across the board, with the critical development area receiving the fewest hits and back-office departments, such as marketing, receiving the most.

"We missed on a product cycle and that cost us on the high end of the marketplace as well as on technologies we could bring into the mainstream," said Ron Yara, S3's senior vice president of strategic marketing. "This was not something that external market conditions forced us to do, but rather something we brought onto ourselves."

S3 began feeling the effects of missing that product cycle during the second half of last year.

Yara added that the job cuts are structured with an eye toward maximizing the company's capacity to invest in new technologies, rather than toward profitability. S3 does not expect to be profitable in the current first quarter, or through the first half of the year, he added.

No further layoffs are anticipated, Yara said, noting that the company preferred to bite the bullet once rather than drag out the process.

Going forward, S3 this year plans to ship two new architectures for the high-performance marketplace. Those products will then be moved into the mainstream PC market. The company also expects to ship two new families of products for the mobile market this year.

S3's announcement follows the company's management restructuring last month, in which Terry Holdt stepped out of retirement to assume the chief executive, president, and chairman posts. Holdt previously had served as the company's vice chairman, CEO, and president. He will remain interim CEO until his permanent replacement is named.