Semtech Corp. Announces First-Quarter Results

May 22, 2001 by Jeff Shepard

Semtech Corp. (Newbury Park, CA) announced that net sales for the first quarter of fiscal year 2002 were $60.5 million, up 5 percent over the prior year period and down 13 percent sequentially. Net income for the first quarter ended April 29, 2001, prior to one-time costs, was $13.9 million, or $0.18 per diluted share. Gross margin remained constant at 58 percent for the first quarter.

One-time costs of $951,000, or $0.01 per share, were recorded during the first quarter in connection with the previously announced reduction in force at the Santa Clara, CA wafer fab and the consolidation of the company's New York, NY location into the Newbury Park, CA location. Total headcount was reduced by 17 percent in the first quarter, including the transfer of employees associated with the company's sale of the Santa Clara wafer fab. The sale was completed on April 24, 2001.

The company anticipates reducing headcount in the second quarter by an additional 12 to 13 percent. The second quarter costs associated with this headcount reduction are likely to be in a range of $1.0 million to $1.2 million. According to Semtech, the reduction will take place in the next thirty days. Semtech currently forecasts that revenue for the second quarter of fiscal year 2002 will be in the range of $38.0 to $40.0 million. Prior to any one-time costs, earnings at this revenue level should be approximately $0.06 to $0.07 per diluted share. Revenue for the third quarter of fiscal year 2002 is forecasted to grow sequentially, based on current market forecasts.

Jack Poe, Semtech's chairman and CEO, commented, “Semtech, along with the entire semiconductor industry, is experiencing one of the most severe down-turns in recent memory. A further reduction in headcount and inventory are necessary steps. In addition, the company has asked customers to only place orders for products that they need and expect to take regardless of future conditions. As painful as these steps are, the primary goal is to get production rates balanced to customer usage during the second quarter. We want to enter the second half of the year without any overhang of current market conditions. Taking as much cost out of the model now will provide profit leverage when growth resumes later in the year.”