Vitesse announces restructuring and staff cuts
In response to continuing adverse market conditions, Vitesse announced a restructuring plan aimed at reducing its operating costs. Around 220 employees, some 20% of the current workforce, will lose their jobs. The restructuring plan also involves the consolidation of certain facilities and the curtailment of several research and development projects.
"The continuing downturn in our industry has made it necessary for us to closer align our operating expenses with revenue levels that are lower than we expected at the beginning of the year," said Vitesse President and CEO, Lou Tomasetta. "We will focus our development efforts on products that give us the most immediate return on investment."
For example, Vitesse has developed 40 Gbit/s parts such as a 16:1 mux, but has now suspended this work until a viable market appears. "We don t see any demand from any of our customers to build 40 Gbit/s systems for at least 18 months," said COO Chris Gardner.
The company has also reorganized its operations in order to focus on four key growth segments: Storage, Ethernet, Transport and Networking.
In its conference call, Vitesse said that it had completed the shutdown of GaAs manufacturing at Camarillo, CA, explaining that this facility has been resized to accommodate indium phosphide development on a very small scale. All of Vitesse s GaAs ICs are now fabricated at its Colorado Springs facility.
"We were a GaAs company, but now that sector is less than 25% of our business, which is mostly CMOS-related," said Gardner at a recent conference. "Two years ago we made mainly lower-level physical layer components, whereas now around 75-80% of our products are upper-level products such as framers and mappers."
Vitesse recorded a net loss for the June 2002 quarter of $735.9 million or $3.71 loss per share. Pro forma net loss was $20.6 million or $0.10 loss per share, compared to pro forma net loss of $11.9 million or $0.06 loss per share in the June 2001 quarter and pro forma net loss of $21.5 million or $0.11 loss per share in the March 2002 quarter.
