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Logitech to cut 15 percent of global work force

Published: January 06 2009

Logitech International has withdrawn its fiscal 2009 sales targets and is planning a restructuring that includes cutting approximately 15 percent of its work force.

Reports have put the job cuts at more than 500.

Logitech (NASDAQ:LOGI), which has its headquarters in Fremont and Switzerland, did not provide new guidance but plans to update investors along with its third-quarter results on Jan. 20.

The maker of computer mice and other peripherals said that with a deteriorating retail environment during December, it had seen weakness across all geographies and channels.

Logitech plans to announce the restructuring charges with the third-quarter results.

Asustek and Gigabyte suffer overstock chipset inventories

By Monica Chen & Joseph Tsai in Taipei

Published: January 13 2009

Lower-than-expected shipments of Intel's 4-series chipsets have caught motherboard makers off guard, leaving Asustek Computer and Gigabyte Technology carrying overstocks of 4-series-based motherboards which are rapidly depreciating in value as Intel prepares to launch its next-generation chipset series, according to motherboard industry sources.

Shipments of 4-series products have been low due to declining market demand and competition from low-cost PCs, the sources commented.

First-tier motherboard makers took on large inventory amounts from Intel under concerns they may lose supply priority or price discounts, the sources claimed. Asustek Computer is said to have taken the largest hit and currently still carries an inventory of 6-7 million units, equivalent to around NT$6 billion (US$180.57 million) in value, while Gigabyte Technology is said to be holding an inventory worth NT$4-5 billion, according to sources at the companies.

Asustek also took an extra gamble and purchased Atom processors along with P45 chipsets in order to gain a better price discount and supply priority from Intel for Atom processors. Company sources revealed that Asustek's P45 motherboard price-cut in late September last year was not meant for profit, but instead an attempt to reduce its inventory excesses.

Currently, motherboard makers are hoping Intel will delay its Havendale, Lynnfield and 5-series chipsets to allow them time to clear inventories, however, Intel is still planning to follow its original schedule and will bring 4-series products into the entry-level market by the second quarter.

Asustek and Gigabyte refused to officially comment regarding their inventory issues, while Intel declined to comment on this report.

Source: http://www.digitimes.com/NewsShow/Article.asp?datePublish=2009/01/13&pages=PD&seq=203

Toshiba in talks on Fujitsu unit

By Robin Harding in Tokyo

Published: January 15 2009 02:00

Japan's Toshiba is in advanced talks to buy Fujitsu's hard-disk drive business in a deal that would make it the world's largest producer of small hard drives for consumer electronics.

While Fujitsu said that it "is holding negotiations with multiple parties", a source close to the deal said that Toshiba was the only partner still under consideration.

A deal, which is expected to be priced at between Y30bn-Y40bn ($340m-$450m), would allow Fujitsu to exit another lossmaking hardware business, as the Japanese group seeks to concentrate on higher-margin IT services. Toshiba, meanwhile, would be able to spread its bets in the data storage market.

Toshiba is one of the world's largest makers of "flash memory" computer chips, used for storage in mobile phones and digital cameras.

Flash memory is expected to expand into notebook computers, because it is small and quick to access, but only hard drives are suitable for applications that need a lot of storage space.

Analysts said the price being offered for the business was fair.

"It's clearly at a discount to global hard-disk players, but that reflects the losses in Fujitsu's business," said Damian Thong, an analyst at Macquarie Securities in Tokyo. But he added that the price could still prove too high if the economic downturn was prolonged.

Fujitsu's hard-drive business has made losses of about Y2bn-Y3bn in the past couple of years because of a rapid fall in prices. Toshiba's existing hard-drive business is marginally profitable, but analysts expect it to lose money this year.

One concern is how much Toshiba will be able to cut costs, given that the sticking point in early talks between Fujitsu and Western Digital, a US hard-disk drive maker, was thought to be Western's unwillingness to guarantee Fujitsu jobs.

Toshiba is only expected to buy Fujitsu's hard-disk assembly business rather than the Japanese factories, which supply high-tech components such as disk-drive heads and magnetic media.

The acquisition would be the latest aggressive move by Toshiba to expand in the face of the downturn.

Source: http://www.ft.com/cms/s/0/dc0c9118-e2a6-11dd-b1dd-0000779fd2ac.html?nclick_check=1

Intel will miss its already-lowered 4Q targets

By Jordan Robertson, Associated Press Technology Writer

Published: January 07 2009

SAN FRANCISCO (AP) -- Even after sharply reducing its outlook for the fourth quarter, Intel Corp. said Wednesday that it would miss its revenue projection by about $500 million, a sign that PC makers and buyers are being more tightfisted than it seemed only two months ago.

Intel shares closed down 6 percent.

Santa Clara, Calif.-based Intel, the world's largest chip maker, now says revenue was $8.2 billion for the last three months of 2008, a 23 percent decline from the year-ago period. Analysts surveyed by Thomson Reuters were expecting $8.7 billion, which was at the low end of the range Intel provided in November of $8.7 billion to $9.3 billion.

Intel's profits also are being hit. It expects its gross profit margin to be at the bottom of its previous guidance, which was for 53 to 57 percent of revenue. Gross profit is the amount of money a company earns after manufacturing costs are stripped out. It's a valuable gauge of how well companies are controlling their costs, and is particularly useful in looking at chip makers since their manufacturing expenses are huge.

Intel is scheduled to provide more detail when it releases full fourth-quarter earnings on Jan. 15.

The fact that Intel has had to revise its fourth-quarter guidance twice indicates how deeply the economic meltdown has damaged the semiconductor industry. It also reveals how hard it is for even conservative companies -- Intel formally stopped doing mid-quarter updates in 2006 -- to figure out how badly they're being hurt.

Intel blamed the latest revision on weaker-than-expected demand, piling up in a chain reaction. Businesses are putting off upgrading to new computers until the economy and their finances improve. And consumers, singed by layoffs and falling home prices and stock portfolios, have scaled back their spending as well. In turn that has prompted PC makers to try to save money by burning through their existing inventories of chips instead of buying lots of new ones.

These trends have slammed chip makers since the downturn intensified in September, and now appears to be worsening.

The news came as little surprise to industry analysts, who have been warning for months that PC suppliers like Intel might miss even their lowered forecasts.

"It's not something that indicates any kind of share loss or structural change in the company or the markets," said Cody Acree, senior semiconductor analyst with Stifel, Nicolaus & Co. "Right now the economy is causing everybody up and down the manufacturing channel to live hand to mouth."

More details will emerge when Intel reports its full quarterly results Jan. 15.

Intel's primary competitor in the market for microprocessors, which are the brains of personal computers, has also slashed its forecasts. Sunnyvale, Calif.-based Advanced Micro Devices Inc. warned last month that its fourth-quarter sales would drop 25 percent from the previous quarter. That implies a drop of 33 percent from the previous year.

Intel shares fell 93 cents, or 6.1 percent, to close at $14.44. AMD shares fell 12 cents, or 4.3 percent, to $2.66.

Intel also needs to absorb a charge for the deterioration of the value of its investment in Clearwire Corp., an Internet provider specializing in a new type of wireless broadband technology called WiMax. Intel, which invested $1.6 billion in Clearwire, plans to take a $950 million non-cash charge in the fourth quarter because of Clearwire's falling market value. Clearwire's stock price has fallen from around $12.50 in October to around $5 today, leaving it with a market capitalization of $833 million. Questions have circled about Clearwire's aggressive network buildout plans in the souring economy.

Time Warner Cable Inc., another Clearwire investor, said Wednesday it would take a similar charge, for approximately $350 million. Google Inc. put $500 million into Clearwire, but spokeswoman Jane Penner declined to comment Wednesday on whether the Internet search leader intended to recognize a loss on its investment.

Representatives for Comcast Corp., which invested $1.05 billion in Clearwire, declined to comment.