Entropic announced Tuesday that it will cut 70 employees, about 10% of its global workforce, amid a broader restructuring plan and a warning that the set-top chipmaker’s second quarter revenues would come in at the low end of its original guidance.
The company said the job cuts are tied to a restructuring plan “designed to refine business operations with the goal of driving long-term profitable growth.” The changes will affect all facets of its marketing and business operations as it looks to “focus on key vertical markets, streamline global manufacturing resources, and consolidate several engineering activities to drive efficiencies.”
Entropic, which expects the restructuring to produce annualized costs of about $9 million, said it expects to complete the plan and workforce reduction within the next month. The company said will incur a pre-tax GAAP charge of $1.7 million in connection with the plan, with most of it recorded in the second quarter of 2013.
The restructuring “also gives us an opportunity to increase investment in strategic areas with more long-term growth potential, including analog mixed-signal and software,” said Entropic president and CEO Patrick Henry, in a statement. Entropic acquired a key piece of that puzzle last month, when it put up $13 million in cash to buy Mobius Semiconductor, a maker of low power analog mixed signal semiconductors.
The company said expects second quarter revenues of about $70 million, and reaffirmed guidance that it will essentially break even during the quarter from a non-GAAP earnings perspective.
On its first quarter call on April 30, Entropic said it expected second quarter revenues to be in the range of $70 million to $73 million, a 2% to 6% sequential decline from the first quarter. Entropic attributed the expected drop off to “seasonal softness” from service providers and because one of its major cable MSO customers was expected to be working through its inventory of hi-definition digital transport adapters (HD-DTAs) during the second and third quarter of 2013. At the time, Entropic said it expects HD-DTA orders to resume by the end of the third quarter.
The restructuring marks another round of cuts for the company, whose original, primary focus was chips based on the Multimedia over Coax Alliance (MoCA) platform for gateways and whole-home DVR products.
In December, Entropic laid off 40 employees, or about 6% of its workforce, as it looked to “rebalance its operations” following a pair of acquisitions earlier in 2012. It splashed out $65 million for set-top box silicon maker Trident Microsystems and $8 million on the intellectual property of PLX Technology.
Entropic is scheduled to announce second quarter results on July 31.
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