RF Micro Devices, Inc. will discontinue its internal wireless local area network (WLAN) chipset development efforts. However, the company will continue to support its WLAN component business, which includes its transceivers for gaming and other applications as well as its WLAN power amplifiers and front-end modules for all WLAN markets.
Bob Bruggeworth, president and CEO, RF Micro Devices, said, "Our actions will enable RFMD to sharpen its strategic focus on our greatest opportunities for long-term, profitable growth, including our industry-leading cellular power amplifiers, our Polaris Total Radio cellular transceivers and our Bluetooth products. RFMD is benefiting from positive customer design activity in these markets, and we remain very enthusiastic about our opportunities for sustainable growth."
In fact, to gain more share in the wireless LAN market, RFMD bought Rosonext Communications for about $133 million in stock in late 2002. The company acknowledged that this acquisition did not meet its expectations.
As a result, RFMD will reduce its WLAN chipset workforce in its San Jose, California, location, close its offices in Moscow, Russia, and Leuven, Belgium, and transfer certain people and resources into other emerging opportunities and product lines within RFMD. However, further details were unavailable.
The results of these actions are expected to reduce the company's ongoing operating expenses by approximately $18 million to $22 million per year, commencing in the 2006 fiscal year, which begins April 1, 2005. Additionally, these actions are expected to result in a non-cash charge for impairment of intangibles and fixed assets of approximately $37 million to $41 million, excluding goodwill impairment, if any, and cash charges for employee severance and related payroll costs of approximately $2 million to $3 million.