LONDON – Canadian mixed-signal chip company Zarlink Semiconductor Inc. has said it plans to reduce its global workforce by approximately 5 percent by the end of fiscal Q2 2012, which ends in September 2011. Zarlink (Ottawa, Ontario) made the announcement within a statement on its fourth fiscal quarter and 2011 fiscal year financial results. Zarlink said it currently employs 515 people.
The company announced fourth fiscal quarter revenue of $54.8 million, at the high end of $51.0 million and $55.0 million guidance range. On that revenue the company made a net income of $17.0 million, which includes an income tax recovery of $13.7 million primarily due to a reduction in valuation allowance related to assets in the U.K.
Zarlink described its fiscal 2011 top line results as the "strongest" in the company's history. Revenue was $230.2 million, up 13 percent compared with fiscal 2010 revenue of $204.6 million. The company made a net income of $69.1 million although this included a reduction in valuation allowance of $31.5 million on deferred tax assets in both Canada and the U.K.
"In fiscal 2011, we delivered the strongest top line results in the company’s history," said Gary Tanner, president and CEO of Zarlink, in a statement. "During the year, we saw increasing customer demand for our network timing, line circuit and medical wireless products. Our timing business grew by nearly 40 percent, driven by strong customer demand for packet timing products required to support time-sensitive multimedia services over new wireless networks," he added. Tanner took over from long-time CEO Kirk Mandy with effect from May 24.
The company said that continuing strong demand for its products tempered by some impact from the aftermath of the Japan earthquake led it see fiscal 1Q12 revenue at between $54 million and $56 million, roughly flat with the fourth fiscal quarter. However, the company also said it expected additional costs from the job cuts it is implementing.
Zarlink sees total costs related to redeployment activities of between $3 million and $5 million over the next two quarters, with initial redeployment costs of between $1.5 million and $2.5 million in the first quarter of fiscal 2012.
If a company lays off people even when they have experienced "the strongest top line results in the company’s history" you can be sure there is one of the dreaded @#$%&@ bean counters at the helm. Anyone like to bet on Zarlink gong bad or bust in the next 5 years?
There once was a brewery in Winnipeg, Canada, that tried to sell their cases of 24 beers for 25 cents lower than the usual price. Local laws prevented this, so instead they sold the cases at the usual price but taped a quarter coin inside each case. Voila!
Yes...there is a business direction transition going on at Zarlink and Gary Tanner has been brought in to execute it.
And, yes, I understand the idea of reshaping the "workforce" to better address new directions a company is heading in.....
But it still seems that if a business is doing (reasonably) well during such a transition there should be scope to retrain and repurpose existing staff for the tasks to come.
Unless of course it is question of firing staff in one location with a view to expanding in another location (where staff and operational costs are lower).
Still, no job is forever and if making money out of creating jobs was so easy we would all be entrepreneurs.
I had a similar thought, except I focused on his use of the phrase "top line results" rather than profit...which made me think that they must be wrapping dollar bills around every part they ship.
But then I remembered Zarlink is Canadian, so perhaps the more appropriate thought should've been "they must be strapping loonies to every part they ship" :)
Those small percent of layoff is a common one, as those of CEOs want some of marginal protection on their next earning’s report. It is not only CEO level, but also director or manager level to have their protection. It is one of workforce management tactic though by many schools and other fellow.
For Zarlink, I am hoping Gary 1). does not buy any company with over price, 2). does not change too much from the current product line. I may watch this company time to time.