10/1/2002 - SwitchCore AB's Board has decided to carry out a restructuring plan to reduce the company's costs. The effects are expected to enable the company to reach a positive cash flow sooner than previously planned, and to make the company independent of any further financing within the framework of the company's agreement with Credit Suisse First Boston (CSFB). SwitchCore estimates that approximately 20 (of 96 total) employees will be let go as a result of the changes. In addition to reducing costs, the restructuring plan will also more specifically focus the company on sales and product development. Meanwhile, the company can state that order bookings has continued to be strong during 3Q.
The company will concentrate the reductions in the administration, management and support areas, primarily in Stockholm and Lund.
"The restructuring plan is long-term in nature and will not affect our ability to continually increase sales, or develop current and future product generations for our customers. It is extremely sad that very capable employees will leave the company, but a cost reduction is a prerequisite for a continued positive development of our operation," says Henric Isacsson, SwitchCore's CEO.
SwitchCore has had nine strong months this year including:
"We feel that the company will continue to progress positively on a stable, growing market," says Henric Isacsson.
The aim of the restructuring plan is to reduce the time in achieving a positive cash flow and thereby make the company independent of any further financing within the framework of the company's agreement with Credit Suisse First Boston (CSFB). The company judges that after carrying out the restructuring plan, it will be able to achieve a positive cash flow within the framework of its existing financing, which includes raising up to SEK 50 million against account receivables (factoring) with SHB. The company bases its forecast on an expected, continued, positive market trend for the company's products, a stable US dollar rate, and a continued successful partnership with Intel.
The cost of the restructuring plan is estimated at SEK 5.6 million. The plan will provide SwitchCore an estimated reduction in costs of around 15%, equivalent to around SEK 30 million annually. The measures are intended to be implemented in October, with the full effects achieved in 2Q 2003.
SwitchCore AB is a fabless semiconductor company that designs, develops, and markets integrated silicon devices for network equipment manufacturers and suppliers, worldwide. SwitchCore's CXE technology significantly increases the bandwidth and performance of switches and routers. With SwitchCore's components customers can reduce manufacturing costs for their complete products and achieve shorter lead times to market. Customers include suppliers of network devices such as Intel, Asanté Technologies and Allied Telesyn. The SwitchCore Group has about 90 employees, offices in Lund and Stockholm in Sweden, San Jose, California and Boston, Massachusetts in the US and Singapore in Asia. The company is listed on Stockholmbörsen's Attract 40 list under the SCOR ticker.
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