Celeritek revenues hit by Motorola strategy
The company currently expects revenues to be approximately $8.0 million to $9.0 million in the March 2003 quarter.
"Continued economic weakness and the loss of a significant customer resulted in lower sales during the quarter," said Tamer Husseini, president and CEO of Celeritek. "We closed the company s R&D office in Lincoln, UK and reduced our worldwide workforce by approximately 12%. These actions will result in savings of approximately $4 million."
Most of the revenue decline came from Celeritek s semiconductor business; semiconductor revenue was $5.5 million in the December 2002 quarter compared to $11.4 million in the previous quarter. This drop reflects the previously announced decision of Motorola, a primary buyer of Celeritek s power amplifier modules, to discontinue its strategy of dual-sourcing PA modules. Celeritek will continue to be the sole source for PA modules for Motorola s model 120v platform, but expects such sales to decline as Motorola transitions to new platforms.
Subsystem revenue in the December 2002 quarter grew to $5.0 million compared to $4.1 million in the previous quarter, and was all from defense customers. In the year-ago period, subsystem revenue was $8.2 million, of which $2.4 million was from commercial sources.
"With the growth in defense spending, we plan to add more engineering resources to support our customer base," said Husseini. "In the past six months we have made significant progress in improving the yields and performance of our GaAs PHEMT process, which is primarily used for defense and space applications. We continue to be a leading supplier of amplifiers and subsystems to major defense contractors."
December 2002 quarter results include a write-off of acquired in-process R&D of $4.6 million related to Celeritek s recent acquisition of the assets of Tavanza, Inc. and special charges of $2.8 million for severance costs, abandoned fixed assets and equipment leases.
"We believe that the technology we acquired with Tavanza will help drive additional sales to leading phone manufacturers, while also providing us with a cost advantage over our competitors," said Husseini.
