By Kirk Ladendorf
Facing a soft economy and weakening new sales orders, Freescale Semiconductor Ltd. said Thursday it is “eliminating” its corporate jet and the crews needed to keep it operating.
The Austin company did not have an immediate estimate on how much money it might save by disposing of the jet, a Dassault Falcon 900, which it owns.
The announcement was made by new CEO Gregg Lowe, who joined Freescale from Texas Instruments Inc. in June. He was speaking on a conference call to analysts regarding the company’s second-quarter financial results.
Lowe said the decision will reduce company spending but have “zero impact on top-line (revenue) growth.”
Freescale reported that its second-quarter sales totaled $1.03 billion, up 8 percent from the first quarter but down 15.6 percent from the second quarter last year.
The company had a net loss of $34 million, down from a loss of $168 million a year ago.
Expanding the company’s product sales and gaining market share is a key priority, Lowe said. “This has been a challenge at Freescale for some time.”
To address that problem, management is performing a detailed examination of the company’s product groups and the markets they are tied to.
“This will likely lead to changes in how we allocate opex (operating expenses) and shifting resources to where we believe we can increase our revenue and top line (profit) margins,” Lowe said.
The CEO said the business reviews will be done this quarter and that he would be able to report results in the fourth quarter.
Lowe has said he intends to “double down” and devote more resources to product lines and markets that show the most promise for growth, while de-emphasizing those that don’t.
Freescale’s largest markets are for automotive and communications networking chips. The companyalso develops chips for industrial equipment and consumer products.
“I am excited to be here and very upbeat about the opportunities ahead of us,” Lowe said.
The company’s outlook for the current quarter was guarded after seeing new orders for some products weaken suddenly toward the end of June.
The company’s guidance was for sales revenue between $955 million and just over $1 billion for the quarter, with a decline in gross profit margins of about three-quarters of 1 percent due primarily to expected reduced utilization rates at its factories.
Source: THE STATESMAN
Date: July 19, 2012