Fiber weakness causes IQE to cut more jobs
The company estimates that its sales revenues for the final quarter of 2002 are likely to be approximately 5% below the £5.6 million ($9.15 million) reported in the previous quarter. This is largely as a result of the adverse movement in the dollar-sterling exchange rate, since the majority of IQE sales are recorded in dollars.
The company has seen continued strengthening in demand for wireless-related products through its US-based operation (IQE Inc), and improving outlooks at both the IQE Silicon Compounds and Wafer Technology divisions.
However, IQE Europe has been particularly badly hit as the fiber-optic components market continues to decline and R&D budgets come under even more severe pressure. This division is attempting to diversify away from its traditional reliance on the fiber communications business.
Despite a predicted in crease in wafer shipment volumes in 2003, revenues for the IQE group are expected to remain relatively flat due to continuing weakness in the dollar-sterling exchange rate and strong industry price reductions.
IQE plans to cut 60 jobs, the majority of which will be at IQE Europe. Overall, these and other measures are expected to generate savings of a further £2 million per annum.
As a result of continued under-utilization of its asset base, IQE has decided to take a non-cash asset impairment charge in its 2002 accounts of approximately 80% of the current net book value of its assets.
"Although we are now seeing improved trading in three of our four divisions, continuing declines in the fiber-optic market and industry uncertainty on the timing and strength of a convincing upturn in the overall economic climate, means that we must continue to bear down on our cost base to ensure our cash position remains strong," said Drew Nelson, CEO of the IQE group.
"We are convinced that our outsourcing model is continuing to strengthen as customers rebuild their own balance sheets, customer capex is reduced and companies strive for more flexible business models to address increased uncertainty and cyclicality within the semiconductor industry."
