SAN JOSE, Calif. Chip-equipment subsystems vendor Newport Corp. on Thursday (Dec. 30) revised its guidance amid a move to restructure and downsize its packaging and automation unit.
Newport (Irvine, Calif.) said it is undertaking a number of cost reduction actions designed to reduce the losses within its Advanced Packaging and Automation Systems (APAS) Division. This includes "changes to the organizational structure of the division and cancellation of several product development programs to more selectively serve the semiconductor automation segment more profitably," according to the Newport.
Newport expects to record non-cash charges of approximately $65.5 million related to the impairment of goodwill and other assets related to APAS. The company now anticipates recording a loss for the fourth quarter in the range of $1.54 to $1.60 per share. It expects its sales for the fourth quarter of 2004 to be within the range announced in October 2004 of $100 million to $103 million.
It will also write off approximately $60 million of goodwill and other intangible assets in the fourth quarter. The goodwill and other intangible assets were originally recorded when Newport purchased Design Technology Co. in 2001 and Micro Robotics Systems Inc. in 2002. Both are now part of APAS.
In addition to the impairment of goodwill, the company
expects to write off approximately $4.5 million in inventory associated primarily with certain discontinued product lines and approximately $1.0 million in fixed assets that will no longer be utilized by this division.
"Our order intake and sales levels for the fourth quarter are meeting our expectations," said Robert G. Deuster, chairman and chief executive, in a statement.
"The integration of Spectra-Physics has led us to undertake a strategic review of all of our businesses. Our Lasers Division and our Photonics and Precision Technologies (PPT) Division are proving to be very compatible and are delivering strong financial results. We expect these divisions to be even more profitable in 2005 once we have concluded our integration program," he said.
"Our APAS Division, which primarily serves the front- and
back-end semiconductor industries, is the only part of our company that will be unprofitable, on a pro forma basis, in the fourth quarter," he said. "This division was also unprofitable during the upturn in the semiconductor capital equipment market in late 2003 and early 2004. This division experienced a slowdown in sales and orders during the third quarter of this year and, because of currently reduced market demand for capital equipment, slow order intake levels continued into the fourth quarter."
Deuster noted that, while APAS accounted for only approximately 5 percent of Newport's total company third quarter sales, it produced an operating loss of $3.5 million.