SAN JOSE, Calif. -- There are more cutbacks at Atmel Corp. The chip maker is now seeking to cut up to 210 workers within its operations in France.
Buried in its second-quarter results on Wednesday (July 30), Atmel said that it is ''commencing a consultation procedure with the works councils in France in relation to potential redundancies in the operations in Rousset and Nantes, France.''
San Jose-based Atmel has a fab in Rousset, which is a drain on resources, analysts said. The company sold its fab in Nantes in 2005.
''Atmel submitted a proposal to French works council to reduce overlap groups, which could impact up to 210 employees,'' said Edwin Mok, an analyst at Needham & Co. LLC, in a report. ''While Atmel cannot provide more details, it stated that the review will take 2-3 months. We believe this is a good sign that Atmel will take additional steps to reduce Euro-based expenses.''
''The elephant in the conference room is Atmel's ability to exit its Rousset France fab, a very expensive plant. Management has that facility fully utilized, and it is one of the firm's two big fabs,'' said Craig Berger, an analyst with FBR, in a report.
''While we would like to see Atmel buy a low-cost facility in the U.S. or Asia, or move all of these products to an Asian foundry, it seems like Atmel is two to three years away from addressing this issue, a disappointing overhang for investors,'' Berger said. ''If the firm can successfully exit this fab, then Atmel could double or potentially triple from current levels, a good opportunity for the very patient investor.''
The disclosure follows a loss for Atmel. Revenues for the second quarter of 2008 were $420.9 million, a 2.4 percent increase compared to $411.2 million for the first quarter of 2008 and a 4.1 percent increase compared to $404.2 million for the second quarter ended June 30, 2007.
Net loss for the second quarter of 2008 totaled $4.9 million, or minus $0.01 per diluted share. This compares to net income of $6.8 million or $0.02 per diluted share for the first quarter of 2008 and net income of
$0.7 million or $0.00 per diluted share for the year-ago quarter.
"We are pleased to have reached the upper end of our revenue guidance in spite of the challenging macroeconomic environment," said Steven Laub,
Atmel's president and chief executive, in a statement. "In addition to achieving record microcontroller revenues, gross profit continued to increase.''
Atmel implemented a change in revenue recognition with regards to its independent distributors in Europe converting from a sell-in to a sell-through revenue
As a result, the company expects that there will be a one time revenue reduction of approximately $28 million to $34 million to third quarter revenues. Including this one time accounting adjustment, third quarter 2008 revenues are expected to be down 3 percent to 7 percent sequentially.