SAN JOSE -- Cypress Semiconductor Corp. today announced a 29% revenue drop for the second quarter, ended July 1, which followed a similar 29% drop in the first quarter. The Q2 results were also down 38% from the year-ago period.
"Our company's quarterly revenue has effectively been cut in half in six months," said Cypress CEO T.J. Rodgers. "We are proud to have endured this precipitous decline in revenue without losing money."
Cypress eked out a profit of $787,000 for the second quarter, excluding goodwill (acquisition-related costs and non-recurring items) on revenue of $185.5 million. A year ago the company's quarterly revenue was $300.8 million. The San Jose chipmaker achieved record revenue of $370.0 million in the fourth quarter of 2000.
Diluted earnings before goodwill (EBG) were 1 cent per share, compared with first quarter 2001 EBG of 25 cents per share and the year-ago quarter EBG of 54 cents per share.
Rodgers said Cypress will take a restructuring charge of $140-$180 million in the third quarter, primarily to write down excess manufacturing equipment and to reduce its manufacturing headcount by 500. There will also be a 10% across-the-board reduction in force in non-manufacturing functions of thecompany, bringing the total reduction in force to 650, he said.
Cypress's WAN/SAN division took the biggest hit, with sales declining 42% in the quarter. The division accounted for 44% of the company's Q2 sales. "We expect this segment to experience another decline in revenue in the third quarter," Rodgers said, adding that he expected a recovery in the wireline market to begin in early 2002.
Sales of computation products, such as timing devices and USB controllers, accounted for 24% of Q2 revenue and declined 18% from the prior quarter. Cypress expects a small revenue increase in this market in the third quarter.
Wireless terminals and wireless infrastructure divisions experienced the smallest decline among Cypress' markets, dropping 12% from the prior quarter. This area also should begin showing improvement in the third and fourth quarters, according to the company.
But Rodgers is taking small comfort in the projections. "The absence of a sizable short-term recovery in the datacom segment--despite promising signs in the computation and consumer segments--along with pressure on average selling prices, will cause us to be unprofitable for the rest of 2001, unless we take action," he said.
"We are therefore sizing the company to a level that ensures optimum cost efficiency for the remainder of this downturn but leaves the right infrastructure in place to grow the company rapidly when the recovery begins."
