Catalyst Semiconductor Inc, the struggling designer of non-volatile semiconductor memory products has announced a restructuring plan that will result in the axing of 20% of its workforce. Ten of the company’s 50 US staff will lose their jobs, following management restructuring within the company in March when chief executive, president and chairman of the board, Michael Powell resigned. New president and chief executive Radu Vanco is under the impression that Sunnyvale, California-based Catalyst will now be able to stop dragging its feet and return to profitability, following six consecutive quarters where the company has turned in a loss. Powell’s departure is not something Vanco feels comfortable talking about, but he has revealed Powell’s departure is connected with the current mess Catalyst is in. Second quarter net losses were $1.9m, down from a loss of $2.5m last time (CI No 3,305), while third quarter losses stood at $6.0m, up from $1.6m at the same time last year. Although Catalyst is claiming profits will return, they will not come in the foreseeable future. The firm has warned its fourth quarter results will be lower than expected, incorporating charges associated with the lay-offs. But it does hope to save around $1.7m in cash expenditure during the quarter, which it is confident will smooth its path to recovery. Vanco will not be pinned down on a time scale in which this recovery will occur, and says he will have a better idea when the next quarter is complete. Catalyst is attributing its poor performance of late, to a $9m backlog. The company claims it has been unable to deliver a significant proportion of that backlog because it was unable to pay for wafers from its foundry operations, because of its cash flow constraints. The new cash savings are intended to shift this backlog, but Vanco says the company is also looking to outside entities to raise additional cash and capital. The markets have not reacted favorably to the news and the company’s shares, which are traded on Nasdaq had hit an all time low of $0.72 as we went to press, having steadily plummeted from its year high of $3.43 in September. Vanco told Computergram he is not specifically addressing the share price figure, and hopes it will recover over time. He said My main objective at the moment is to save money and look at the short term problems, the share price falls into the medium and long term plan. But he did admit, I am worried about everything.Catalyst also employs around 35 staff in the Middle East and Eastern Europe, where it intends to intensify its business operations. These staff will not be affected by the restructuring.
