Sipex Corp.'s senior executives are taking the analog-IC manufacturer back to the drawing board.
In a bid to boost flagging sales and shore up profits, Sipex Corp. said last week that it will reorganize its businesses to cut costs and improve operating efficiency.
Sipex, which in November closed its acquisition of Calogic, said it will relocate the new subsidiary to Milpitas, Calif., and take a one-time charge of $1.9 million in the December quarter. Sipex had earlier promised that Calogic would remain in its Fremont, Calif., office.
"The restructuring will allow Sipex to realize cost savings by reducing corporate overhead, streamlining sales and marketing, and eliminating redundancies," the company stated.
Sipex said it also plans to record an extra $1.2 million charge for the Calogic acquisition in the December quarter and expects to complete the reorganization by the third quarter of 2000. A one-time charge of $400,000 also will be recorded for the possible closure of worldwide sales and marketing offices.
Although its operations are still profitable, Sipex's revenue has been declining because of its failure to receive an adequate amount of wafers from its outside foundry partners. The development hurt the company's third quarter sales, which fell to $14.4 million, from $16.2 million, in the third quarter of 1998.
Earnings fell about 50% during the same period, to $1.5 million, or 8 cents per share, from $3 million, or 16 cents per share, in the comparable 1998 quarter.
The proposed reorganization will enable Sipex to cut sales, marketing, manufacturing and administrative costs, while focusing on leveraging its new wafer plant to service Calogic's product lines, the company said.
The reorganization "will allow us to take advantage of our state of the art wafer facility, which we have been bringing online since March," said James Donegan, chairman and chief executive of Sipex. "By bringing 6-in. capability to the rapidly growing Calogic/Alpha product lines versus their existing 4-in. production facility, we will ensure optimal utilization of our facilities."