Vitesse Semiconductor Posts Huge Loss, Will Restructure

Communications-chip maker Vitesse Semiconductor (VTSS) announced it will lay off 17% of its workforce after reporting a huge net loss in earnings for the third quarter of its fiscal year 2002.

The Camarillo, Calif.-based company reported a net loss of $735.9 million, or $3.71 a share, and $43 million in revenue. That compares with a loss of $21.5 million, or 11 cents a share, in the prior quarter, and $11.9 million or, 6 cents a share, in the year-ago quarter.

Stripping out charges that include a $403 million reduction in book value of goodwill, Vitesse reported a loss of $20.6 million, or 10 cents a share.

Analysts polled by Thomson Financial/First Call expected a 10-cent per share pro forma loss on $44.36 million in revenue for Vitesse.

The company plans to eliminate 200 jobs, is cutting some research and development projects, and consolidating facilities. It also is reorganizing to focus on storage, Ethernet, transport and networking segments.

"The continuing downturn in our industry has made it necessary for us to closer align our operating expenses with revenue levels that are lower than we expected at the beginning of the year," said CEO Lou Tomasetta in a prepared statement. After the cuts, Tomasetta said he expected Vitesse's break-even point to be $60 million in revenue per quarter.

Vitesse, which has dropped more than 73% since the beginning of the year, closed down 17 cents, or 5.1%, to $3.18 Thursday.

Fellow communications-chip maker PMC-Sierra (PMCS) also reported, announcing that it just missed sales numbers but had a narrower-than-expected loss.

The company reported a net loss of $11.6 million, or 7 cents a share, according to generally accepted accounting principles. That compares with a loss of $13.7 million, or 8 cents a share in the prior quarter.

PMC-Sierra reported revenues of $54.5 million, a gain of 5% over the prior quarter but a drop of 42% from the $94.13 million in revenue from the year-ago quarter.

Expectations were for PMC-Sierra to lose 8 cents a share on $54.91 million in revenue, according to Thomson Financial/First Call.

PMC-Sierra, which has fallen more than 54% since the year started, closed off today down 22 cents, or 2.2%, to $9.80.

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