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October 2, 2006
WOBURN, MA. - Skyworks Solutions Inc., a maker of integrated circuits used in mobile phones, said Monday it will exit its baseband operations business, and it expects to cut 425 positions as part of a restructuring plan.
The restructuring is expected to result in a charge of $85 million to $95 million, which will cover the costs of a 10 percent reduction of its worldwide work force as well as plant closings. The bulk of the charges will be taken in the just-completed fourth quarter of fiscal 2006. The strategy change is also expected to cut $70 million in annual costs.
The company said that dissolving the baseband business will allow it to strengthen research and development, as well as marketing and sales efforts for its core business, which has grown sales by an average of 17 percent over the past four years. Baseband chips convert digital signals into sounds in mobile phones.
With the disposal of the baseband business, the company expects to post fiscal 2007 earnings, excluding certain expenses, of 55 cents to 60 cents per share on $820 million to $840 million in sales. Analysts were expecting the company to report earnings of 29 cents per share on $839.6 million in revenue, including the baseband operations.
Looking to the first quarter, the company expects to earn 12 cents to 14 cents per share, while analysts polled by Thomson Financial currently expect the company to report earnings of 8 cents per share.
Shares of Skyworks were trading at $7.02 in the after-hours session, up $1.96, or 38.7 percent, from Monday's closing price of $5.06 on the Nasdaq.
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