Semiconductor vendor Marvell Technology Group Ltd. (NASDAQ: MRVL) says it will restructure its operations to decrease its annual operating expenses from the current $1.08 billion to approximately $820 million to $840 million. The move will see the company lay off approximately 900 employees worldwide and explore the sale of non-strategic assets.
The company hopes to finish the trimming by the end of October 2017.
"The single biggest factor limiting the potential of the cloud and utilization of billions of connected devices is the bandwidth of today's technology. By focusing on our strengths in storing, moving, and accessing data at high speeds, Marvell is well-positioned to enable the technology of tomorrow," asserted Matt Murphy, Marvell's president and CEO.
The layoffs will come as Marvell discontinues certain R&D programs, streamlines engineering processes, and consolidates R&D sites. The company did not detail which programs and sites would come under the axe, saying it would offer more details on its upcoming 3Q17 earnings call November 17. However, it did say it expects the actions to trim annual operating expenses by $180-200 million.
Meanwhile, the businesses Marvell hopes to sell account for approximately $60 million in operating expenses and $100 million in revenue, based on a first half of fiscal 2017 annualized run rates. Again, the company did not identify which business would be put on offer.
Marvell currently supplies chips for the automotive, cloud services, Internet of Things, and multimedia applications. These include the AVANTA line of devices for broadband applications (see, for example, "Marvell introduces AVANTA series for broadband optical access") and the Alaska line of Ethernet chips (see, for example, "Marvell offers silicon for end-to-end 25GbE data center networks"). It also supplies semiconductors used in printing applications.
The company expects to incur charges of $90 million to $110 million over the next four quarters, including cash charges of $35-50 million, due to the restructuring. These figures include estimates of severance, asset impairment, lease termination fees, and other costs.
"These are difficult but necessary changes," Murphy said. "I'm confident these actions will yield a greater return on our R&D investments, deliver the innovation our customers need, and generate the value our shareholders expect."
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