MACOM to restructure - planning to close seven facilities

The restructuring plan includes a permanent reduction of the company's hourly, salaried and management workforce of approximately 250 employees, or 20% of the total workforce – this includes personnel in R&D, production, sales and marketing as well as general and administrative functions, a press release reads. Additionally MACOM is planning the closure of seven product development facilities, including locations in France, Japan, the Netherlands, Florida, Massachusetts, New Jersey and Rhode Island. At the same time the company also announced it will no longer invest in the design and development of optical modules and subsystems for Data Center applications. Going forward, MACOM will be a merchant supplier of semiconductor ICs and photonic devices and will support optical module manufacturers at the semiconductor component level. “We do not make these decisions lightly, however, these actions are necessary in order to strengthen our strategic plan,” says Stephen Daly, President and Chief Executive Officer, in the press release. With all this in mind, the company expects approximately USD 14 million in restructuring charges including USD 7 million for employee severance obligations, a majority of which are expected to be incurred during the third fiscal quarter of 2019. Updated outlook Revenue in the quarter is expected to be between USD 107 million and SUD 109 million, compared to prior guidance of USD 120 million to USD 124 million. The updated guidance reflects the impact of discontinuing shipments to Huawei Technologies and certain of its subsidiaries and affiliates as a result of the U.S. Department of Commerce action of adding Huawei to its “Entity List.” In addition, the updated guidance also reflects reduced shipments to certain of MACOM’s distribution channel partners. Non-GAAP gross margin is now expected to be between 39% and 41%, which includes approximately USD 14 million in inventory reserves. These inventory reserves are primarily associated with certain Data Center products and products that would otherwise be shipped to Huawei. This compares to prior non-GAAP gross margin guidance of 53% to 55%.