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Jobs Axe Hangs Over Anadigics

The GaAs chip maker will focus on cutting outgoings through the rest of 2008 and is targetting a sales resurgence in a year's time, once it has regained credibility.

Anadigics is currently weighing its options to reduce expenses after recording a $15.5 million loss, with job cuts featuring high on the list of likely measures.

Chief financial officer Tom Shields expects a final decision within weeks, as the company realigns output at its Warren, New Jersey, fab to match demand.

“You would expect that in the course of November all actions would be taken," he said. “We can't dismiss headcount as we consider our options."

The move comes as the GaAs chip maker slid backward from peak sales of $80.5 million in the three months to June, to $58.1 million in the quarter ended September.

This figure is $4 million below its previous guidance, thanks to problems in Anadigics broadband business piling up on top of lost revenues from handset customers.

The company s high-profile wireless LAN products previously earned it sole supplier status with Intel, but this is where the latest problems are focussed. Intel has delayed some orders from Anadigics, and has added a second source of PAs for its latest Centrino 2 platform.

Shields now predicts that the current period s revenues will be even lower, with $46 million the likely maximum.

Interim CEO Gilles Delfassy describes a Warren GaAs fab that neared meltdown in its peak quarter and must now be reorganized.

“That was not a sustainable solid capability," he said. “The fab had been pushed to overheating."

“The first step of our recovery is installing procedures to make it capable of even doing $80 million on a sustainable basis, not just once at the expense of the next quarter and the quarter after."

In the eight weeks that he has been acting as CEO Delfassy has already hired Intel veteran Sunil Banwari to replace Anadigics previous head of operations. He has also added new fab, process engineering and equipment managers.

The Delfassy team looks to be employing a back-to-basics approach, as the completion of its Chinese facility is set to be the only outgoing near-term capital expenditure. That building will not even see any equipment installed initially, with Anadigics incurring a nearly $2 million charge this quarter for all of its equipment order cancellations.

However, the chip maker remains confident it will return to the profitability it lost this quarter next year, and is now targeting handsets due for production ramps in 2009.

“I actually never heard the customer say I don't want to work with you again because you have disappointed me," Delfassy claimed. “Everybody said, We are so sad that you have been a bad supplier, because your products are exciting. "

“That makes me believe that as soon as we regain our credibility we will resume our growth."

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