IR looks to sell 'non-focus' product lines

SAN JOSE, Calif. — International Rectifier Corp. on Wednesday (April 12) said that it is exploring the potential sale of the company's commodity or “non-focus products business.” This includes both its “non-aligned products” and “commodity products segments.”

These products are not considered to be aligned with the company's long-term objectives or do not meet its gross margin and revenue growth targets, according to IR (El Segundo, Calif.) Goldman, Sachs & Co. has been retained to advise the company on a possible sale.

Still, IR said that its “non-focus products” comprised 23 percent of company’s revenues in the most recently reported quarter.

The company claims that it previously announced plans to de-emphasize its commodity business and accelerate the transition to high-performance analog, mixed-signal, and digital ICs and advanced-circuit products. These products are currently included in the company's so-called Focus Products group, which was 77 percent of revenues in the most recently reported quarter, with gross margins of 48 percent.

IR recently posted GAAP net earnings of $24.3 million, or 34 cents per share on sales of $278.8 million in its second fiscal 2006 quarter ended December.

For the prior-year quarter, earnings were $39.5 million, or 55 cents per share on sales of $298.6 million. In the previous quarter, earnings were $26.2 million, or 36 cents per share on sales of $272.6 million.

In non-focus products, revenue declined 10 percent from the September quarter. IR continued to manage its exposure to commodity products where revenue declined 6 percent sequentially. In non-aligned products, a 16 percent decline in revenue was largely due to timing differences on program ramps.