Micrel lays off, lowers Q4 estimates

By Suzanne Deffree, Managing Editor, News -- 1/6/2009

Micrel Inc will cut 6% of its workforce in an effort to control expenses and protect its earnings.

According to the employment section of its Web site, Micrel has approximately 900 employees worldwide. The company did not specify its timeframe for the layoffs.

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Micrel announced the workforce reduction this morning as part of a Q4 2008 downward guidance revision. The analog, high-bandwidth communications, and Ethernet IC vendor now projects Q4 revenues will be down 18% to 20%, compared with the company's previous guidance issued in late October of down 7% to 13%.

Micrel said it expects Q4 earnings per share to be approximately $0.06 to $0.08, compared with the previous guidance of $0.08 to $0.11.

Micrel reported $67.5 million in revenue and $0.12 in earnings per share for its Q3.

"The shortfall in revenue is primarily a result of lower than anticipated OEM turns-fill orders and distribution re-sales occurring in late November and December," Micrel said. "The turns-fill deficit resulted from reduced orders from both the OEM and distribution channels. The book-to-bill ratio for the fourth quarter was below one."

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Reduced orders from components distributors have been noted by several companies and analysts when downgrading estimates in recent weeks. Indeed, FBR Capital Markets today pointed out that companies that recognize distributor revenues on a sell-in basis are at higher risk for revenue declines than those companies that recognize sales on a sell-through basis as component distributors de-stock inventory during this financial downturn.

The Q4 guidance revision and layoff announcement come after Micrel on December 18 appointed a new CFO, former Cirrus Logic exec Ray Wallin.

Micrel has yet to set a date for its Q4 earnings call.

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