PHILADELPHIA Freescale Semiconductor said it is considering other options for exiting the wireless handset IC business after failing to find a buyer for the division in furtherance of its plans to focus on the automotive and networking equipment markets.
Rich Beyer, chairman and CEO at Freescale, said in an interview the company is considering selling pieces of the cellular division rather than hold out for a single buyer. The current weakness in the economy and the tight financial market has complicated the mergers and acquisition market, he said.
"Circumstances are very difficult for any kind of significant acquisitions at the moment while companies are weighing how far down the market is going to go," Beyer said. "The condition for the sale of the entire business has deteriorated and I am not optimistic that we will be able to sell the unit in total."
Freescale will instead consider offers for portions of the wireless semiconductor business and "continue to support current customers and wind down the division," he said.
Sales in the cellular IC division fell sharply in the fourth quarter, dropping to $64 million from $344 million in the immediately preceding quarter and $303 million in the year-ago comparable period.
Beyer did not provide additional details regarding offers Freescale is considering for parts of the business but insisted the company won't go back on its decision to exit the wireless IC market.
The company's options are in fact even more limited today than when it initially decided to sell the mobile semiconductor division. With sales down and cash flow constrained, Freescale has to even more tightly manage expenses and executives said the company is focusing resources on markets where it sees future growth opportunities.
The company has instituted additional cost-cutting actions since announcing a major reorganization plan early in the second half of 2008 and sees further cost-savings during the ongoing quarter.
Freescale's net loss widened sharply to $4 billion in the fourth quarter—after a huge impairment charge of $3.6 billion—from a net loss of $525 million in the fourth quarter of 2007. Revenue sank 39 percent to $940 million from $1.5 billion.
The company closed the quarter with approximately $1.4 billion in cash and said it has more than enough funds to continue to "operate in a difficult environment."