Entropic re-structures with 23% headcount reductionMonday, June 9th, 2014
Entropic Sharpens Engineering and R&D Resource Focus; Consolidates Global Offices to Improve Efficiencies and Reduce Costs
- Restructuring Plan Designed to Accelerate Path to Profitability; Annualized Cost Savings of Approximately $24 Million
- Company Lowers Guidance Range for Q2 2014
SAN DIEGO — Entropic (Nasdaq:ENTR), a world leader in semiconductor solutions for the connected home, today announced a plan designed to sharpen its engineering and research and development (R&D) focus and increase the efficiency of its global operations. The initiative calls for a closing and consolidation of several global facilities impacting approximately 23 percent of Entropic’s global headcount. Through these efforts, Entropic will seek to align its cost structure around providing more focused engineering, R&D and product development programs, deliver improved performance through a stronger operating profile and create value for its shareholders.
Today’s actions, which are expected to be substantially completed by the fourth quarter of 2014, will place a higher concentration of engineering, R&D and product development efforts in San Diego, Irvine and San Jose, California, with specialized and local efforts maintained in Shanghai and Shenzhen, China and Belfast, Northern Ireland. Entropic will close major engineering sites in Austin, Texas; Israel; India; and Taiwan. By consolidating sites, Entropic anticipates it will be able to reduce product development complexity, create immediate operational efficiencies, and lower structural overhead costs. Entropic offered approximately 30 percent of the staff in the facilities closing an opportunity to relocate to one of its California sites and expects to have approximately 500 employees at year’s end. Entropic is offering transition assistance to those impacted by the restructuring.
“Our actions today, while difficult to make as they affect our team of dedicated, talented employees, will enable Entropic to better target resources, improve short-term performance and accelerate our path to profitability while maintaining the proper level of investment in product development, the commercialization of new products, and general customer and design-win support,” said Patrick Henry, president and chief executive officer, Entropic. “We believe our restructuring and site consolidation plan will enable a stronger Entropic that will be more focused on innovating silicon and software solutions with greater speed and efficiency.”
Beginning in the fourth quarter of 2014, Entropic expects to realize approximately $6 million in quarterly savings, primarily in operating expenses mainly related to personnel and facilities expenses, with annualized savings in those same areas projected at $24 million.
The Company expects to incur a total pre-tax restructuring charge of approximately $5 million, of which roughly 75 percent is expected to be cash expenditures.
Today, Entropic also announced it lowered its previously announced financial guidance for the second quarter of 2014. Entropic now expects revenue for the second quarter to be in the range of $50 million to $51 million. The Company also lowered its prior guidance for non-GAAP loss per share to approximately $0.13 for the same period, and lowered its guidance for GAAP loss per share to approximately $0.23 for the same period.