With weak customer demand now extending to international markets, Altera Corp. today said it will be forced to take a $115 million pre-tax write down for excess inventory -- a move it earlier refused to make, believing its general-purpose programmable logic devices could eventually be sold through.
Altera, San Jose, said the write down represents just under 40% of its inventory load, or about a year's worth of supply, much of it in the form of FLEX 10KE die. The company's desired inventory level is two to three months.
Altera is also attempting to cut expenses by laying off 152 people -- or 7% of its worldwide workforce -- consolidating offices, and writing down various intangible assets, all of which will result in a $10 million restructuring charge. The company said it has already reduced executive officer pay by 10%, and postponed employee raises.
The word came just a day after rival Xilinx Inc. lowered its June-quarter forecast for the second time. Xilinx Tuesday said its revenue would likely decline 32% below the March quarter, when it wrote down $30 million worth of Virtex FPGA inventory.
Altera's second-quarter revenue outlook is unchanged from ealier projections, with an expected 25% decline from the March quarter. Gross margins are also expected to hold at above 64%.
But to keep supply in line with its goal, Altera said it is working with suppliers to supress cycle times, and with customers and contract manufacturers to improve inventory and demand data.
Additionally, the company outlined a new stocking policy that includes retaining only its newest products in finished goods inventory, holding die banks of high volume product lines, and putting older product lines on build-to-order status.