Freescale posts $4B loss, could sell cellular business in piecemeal
Recording losses and declining sales, Freescale continues to evaluate plans for its cellular handset business, including the possible sale of the unit in piecemeal.
By Gail Flower, Contributing Editor -- EDN, January 30, 2009
Recording losses and declining sales, Freescale Semiconductor continues to evaluate plans for its cellular business, including the possible sale of the unit in piecemeal.
The company in October 2008 first announced plans to exit its mobile IC business, exploring options for its cellular handset chipset business that included the unit's sale or the formation of a joint venture, and stating it would eliminate its minimum mobile IC purchase agreement with its former parent company Motorola as part of the action. Freescale said at the time that it was exiting the cellular business to increase its investments in the automotive and networking markets, where it contributes automotive MCUs, communication processors, and RF ICs.
On its earnings call Thursday, Freescale said it intends to complete a sale, joint venture, or other transformation, noting that it would consider selling portions of the business. However, no final decision has been made and the cellular business will be sold as one unit if a buyer appears, Freescale said.
Freescale also outline Q4 sales declines and growing losses on the call. For the December quarter, sales of $940 million were down 33% as compared to Q3 results and down 39% as compared to the same period last year. December quarter net loss of more than $4 billion compared to a loss of $3.48 billion in Q3 and a loss of $525 million in Q4 2007.
“The challenging economic climate significantly impacted our fourth quarter results,” said Rich Beyer, Freescale's chairman and CEO, in a statement. “Despite the current climate, our priorities are clear and achievable. We remain focused on further reducing our break-even point while ensuring we execute on our strategic growth initiatives and leverage our market leadership positions.”
The company plans to cut where it can with $600 million identified areas of annualized cost savings for 2009. These targeted areas include: restructuring programs, executive pay reductions, reductions in discretionary spending, benefit reductions for all employees, and an asset-light manufacturing model. Beyer said the company will invest in areas of current success involving design widths, microcontrollers, RF, analog, sensors, networking, and multimedia.
Freescale’s Q4 sales in product areas were as follows: Microcontroller sales were $304 million, compared to $408 million in Q3; RF, analog, and sensor sales were $232 million, compared to $261 million in Q3; networking and multimedia sales were $273 million, compared to $307 million in Q3; and cellular sales were $64 million, compared to $344 million in Q3.
For the full year, Freescale recorded sales of $5.23 billion, down from 2007 sales of $5.72 billion. Loss for 2008 of more than $7.93 billion compared to loss of more than $1.61 billion in 2007.
