Cypress Semiconductor cuts Q4 revenue forecast

December 24, 2002 (Computerworld)

Holes in its product portfolio, downturns in the economy and customers making their own products are among the causes for Cypress Semiconductor Corp. revising its fourth-quarter financial projections, officials at the San Jose-based company said yesterday.
Cypress is expecting to take a 12-cent-per-share loss for the quarter ending Dec. 29 and said its revenue will now be $174 million, down from analysts' forecasts of $187 million.
The company also said that it has cut its workforce by 300 positions in the current quarter, including 40 cuts last week. Workers still on the job will have to take a two-week unpaid furlough.
In a conference call yesterday, Cypress President and CEO T.J. Rodgers laid out some of the reasons for the company's poor performance.
Decisions by Schaumburg, Ill.-based Motorola Inc. to switch to phones based on 16M bit pseudostatic RAM, which Cypress doesn't produce, and Intel Corp.'s decision to build chips based on 2.2 voltage -- also not in the Cypress portfolio -- cost the company tens of millions of dollars in revenue, he said.
Cypress wasn't prepared for either change, both of which cut into the company's market share, Rodgers said.
However, he said that the company was recovering and should be able to compete in those areas soon. He expects that by adapting to these changes, Cypress should be able to recover $10 million in revenue.
The company also took hits from the conclusion of a large infrastructure project in Italy it undertook with Rome-based Enel SpA.
Seasonal downturns in the sales of Sony PlayStation 2 (PS2) video game consoles have also hurt Cypress. Rodgers said past trends show that this market should stay flat through the first quarter of 2003, because sales of the PS2 aren't expected to rise.
Cypress will issue its actual fourth-quarter earnings on Jan. 23. Attempts to reach analysts to comment on Cypress' announcement were unsuccessful.