PMC-Sierra closes R&D centers, cuts 175 jobs

-March 30, 2007

PMC-Sierra Inc. today announced 175 layoffs and the closure of two of its R&D centers in an effort to save some $20 million to $24 million a year.

PMC-Sierra, a Santa Clara, Calif.-based provider of broadband communications and storage semiconductors, said the job cuts will come from its 1,183 employee organization and that the closures will affect Canada R&D centers in Winnipeg, Manitoba, and Saskatoon, Saskatchewan.

Today’s move isn’t a new strategy for PMC-Sierra. The company announced at the August 2006 that it would close its Ottawa, Canada, development site and axe between 30 and 40 workers. Sans the closures, a similar approach was taken in 2005 when PMC-Sierra announced that it would cut 89 jobs.

PMC-Sierra said the restructuring will begin immediately and is expected to be substantially complete by the end of Q3. The company estimates the total costs and charges associated with the restructuring will be $12 million to $14 million.

“By improving the efficiency of our operations while focusing on our most promising growth opportunities, PMC-Sierra will become more efficient and be in a better position to compete and gain share in our key target market segments,” said Bob Bailey, chairman and CEO of PMC-Sierra, in a statement. “These initiatives will better align our efforts on our strategic customer engagements in the fiber to the home, enterprise storage, and other communications infrastructure product areas.”

Despite the restructuring efforts, PMC-Sierra’s Q1 guidance improved. The company said it now expected revenues for the quarter to be between the middle to high end of the range that was provided during its Q4 2006 earnings release. At that time, the revenue outlook provided was a range of $98 million to $105 million.

PMC-Sierra is slated to provide more information on today’s announcement in its Q1 call, scheduled for April 25.

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