Marvell restuctures mobile platform business
As approved by the Company’s Board of Directors, the company plans to significantly downsize the mobile platform organization to refocus its technology to emerging opportunities in IoT, automotive, and networking.
Based on preliminary estimates for the first half of fiscal 2016, the mobile platform generated roughly $122 million in revenues and roughly $13 million in gross profit.
The successful restructuring of the mobile business is currently expected to result in annualized operating expense savings in the range of $170 million to $220 million. Included in this operating expense savings is estimated share based compensation in the range of $15 million to $20 million. The downsizing of the mobile platform organization is currently expected to result in an approximately 17% reduction in global headcount.
The restructuring will begin immediately and the company expects the major activities to take place through the end of fiscal 2016. As a result, the Marvell expects to incur total charges of approximately $100 million to $130 million. The major components of the total charge include severance and employee-related costs expected to be incurred in the third and fourth quarters of fiscal 2016 and are expected to be in the range of $45 million to $55 million. Other major components include facilities and asset impairment charges in the range of $30 million to $40 million and an inventory write down charge in the range of $25 million to $35 million. Given the early stages of this restructuring process, the amount and timing of the aforementioned charges may be updated.
More details of the restructuring of the mobile platform business is expected in the company’s next quarterly earnings conference call, the date of which is yet to be determined.
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