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Mosaid pulls the plug on semiconductors
By Leo Valiquette, Ottawa Business Journal Staff
Tue, Sep 16, 2003 10:00 AM EST
George Cwynar
Mosaid Technologies has decided to axe its struggling semiconductor division, a move that will sacrifice 34 jobs for the sake of the company's bottom line.
The company operates in three key divisions. The one that carries the highest profile is Mosaid's intellectual property division, which licenses the company's trademark DRAM technology to electronics manufacturers worldwide.
The other two are the semiconductor division, a fabless provider of networking chips, and the systems division, which supplies engineering memory test and analysis systems to memory manufacturers, foundries and fabless chip companies.
Tuesday's restructuring will see the semiconductor division shut down and nine of its employees shifted over to a new design licensing group in the intellectual property division.
Another 34 staff will be cut in the restructuring, reducing the overall workforce to about 65.
"It think it's good," Dlouhy Merchant Group analyst Greg Reid said in reaction to the news. "Pretty well overdue considering market conditions."
Reid added that the semiconductor operation has been a big cash drain for the company and the cost savings should "do a good job of bringing Mosaid back to profitability."
In a research note released earlier this month, Reid predicted that Mosaid would likely dispose of the semiconductor division in some fashion within the next three to six months.
He also expects that Mosaid will eventually dispose of its systems division as well, making it a pure play licensing operation.
In April Mosaid cut 58 staff in the semiconductor and systems divisions. Product development in the semiconductor division was narrowed to focus solely on content addressable memory, or CAM, chips.
"However, as with many chip initiatives focused on networking equipment vendors, we found that the market for CAMs did not grow as we had expected and as a result became economically unattractive," Mosaid chief executive George Cwynar said in a statement Tuesday.
Richard Boadway, Mosaid's senior VP and CFO, said the company continues to look for a buyer for the company's CAM technology. Shutting down the operation while that search continues will reduce monthly costs by $1 million.
The company said the restructuring will incur a charge of $4.9 million. About half of that charge stems from severance costs for the laid off staff.
Reid estimates the move could save Mosaid $5 million to $7 million a year, or 35 to 40 cents a share after tax.
For the 2004 fiscal year, Dlouhy believes the move will boost earnings per share from its current estimate of 32 cents to a range of 65 to 70 cents.
NO WORD ON PATENT SUITS
Monday was considered to be a key court day for Mosaid in its patent suits against Asian electronics giant Samsung and Germany's Infineon Technologies.
The Samsung suit is being heard in a New Jersey District Court, while the Infineon suit is being heard in a California court. Mosaid wants to pull both suits together in New Jersey, where it feels it has the best chance of victory, while Infineon wants to pull the suits together in California.
Despite the fact that a key decision was to have been made on Monday, Mosaid has remained mum on any new developments.
The seven patents in question concern Dynamic Random Access Memory, or DRAM, the most common type of random memory chip used in computers. Mosaid said it has developed nine generations of DRAM during its 27-year history.
Such suits are the bread and butter for Mosaid's intellectual property division, with a victory meaning these companies will start having to pay licensing fees to Mosaid to continue using the technology.
Since 1999 Mosaid has negotiated licensing deals related to its DRAM technology with Fujitsu, NEC, Toshiba, Hitachi, Mitsubishi Electric, OKI Electric and Matsushita.
By Leo Valiquette, Ottawa Business Journal Staff
Tue, Sep 16, 2003 10:00 AM EST
George Cwynar
Mosaid Technologies has decided to axe its struggling semiconductor division, a move that will sacrifice 34 jobs for the sake of the company's bottom line.
The company operates in three key divisions. The one that carries the highest profile is Mosaid's intellectual property division, which licenses the company's trademark DRAM technology to electronics manufacturers worldwide.
The other two are the semiconductor division, a fabless provider of networking chips, and the systems division, which supplies engineering memory test and analysis systems to memory manufacturers, foundries and fabless chip companies.
Tuesday's restructuring will see the semiconductor division shut down and nine of its employees shifted over to a new design licensing group in the intellectual property division.
Another 34 staff will be cut in the restructuring, reducing the overall workforce to about 65.
"It think it's good," Dlouhy Merchant Group analyst Greg Reid said in reaction to the news. "Pretty well overdue considering market conditions."
Reid added that the semiconductor operation has been a big cash drain for the company and the cost savings should "do a good job of bringing Mosaid back to profitability."
In a research note released earlier this month, Reid predicted that Mosaid would likely dispose of the semiconductor division in some fashion within the next three to six months.
He also expects that Mosaid will eventually dispose of its systems division as well, making it a pure play licensing operation.
In April Mosaid cut 58 staff in the semiconductor and systems divisions. Product development in the semiconductor division was narrowed to focus solely on content addressable memory, or CAM, chips.
"However, as with many chip initiatives focused on networking equipment vendors, we found that the market for CAMs did not grow as we had expected and as a result became economically unattractive," Mosaid chief executive George Cwynar said in a statement Tuesday.
Richard Boadway, Mosaid's senior VP and CFO, said the company continues to look for a buyer for the company's CAM technology. Shutting down the operation while that search continues will reduce monthly costs by $1 million.
The company said the restructuring will incur a charge of $4.9 million. About half of that charge stems from severance costs for the laid off staff.
Reid estimates the move could save Mosaid $5 million to $7 million a year, or 35 to 40 cents a share after tax.
For the 2004 fiscal year, Dlouhy believes the move will boost earnings per share from its current estimate of 32 cents to a range of 65 to 70 cents.
NO WORD ON PATENT SUITS
Monday was considered to be a key court day for Mosaid in its patent suits against Asian electronics giant Samsung and Germany's Infineon Technologies.
The Samsung suit is being heard in a New Jersey District Court, while the Infineon suit is being heard in a California court. Mosaid wants to pull both suits together in New Jersey, where it feels it has the best chance of victory, while Infineon wants to pull the suits together in California.
Despite the fact that a key decision was to have been made on Monday, Mosaid has remained mum on any new developments.
The seven patents in question concern Dynamic Random Access Memory, or DRAM, the most common type of random memory chip used in computers. Mosaid said it has developed nine generations of DRAM during its 27-year history.
Such suits are the bread and butter for Mosaid's intellectual property division, with a victory meaning these companies will start having to pay licensing fees to Mosaid to continue using the technology.
Since 1999 Mosaid has negotiated licensing deals related to its DRAM technology with Fujitsu, NEC, Toshiba, Hitachi, Mitsubishi Electric, OKI Electric and Matsushita.
