Rockwell International Corp said it is resizing its semiconductor systems unit as it furthers preparations for a spin-off of the business later this year. As a result of charges and write-offs related to restructuring the unit, which includes a workforce reduction, Rockwell expects to record a fourth- quarter operating loss of $265m. The Costa, Mesa, California electronic controls and communications giant will cut the semiconductor staff by about 700 people, or 10% worldwide, and close a wafer fabrication facility in Colorado. The moves are part of a plan to cut semiconductor systems operating costs by $200m on a pre-tax basis to bring the size of the business in line with the realities of the semiconductor market, the company said. The unit will be spun off to existing Rockwell shareholders in late December, although an exact share ratio has yet to be determined, and the company is trying to position it for future profitability. Rockwell wouldn’t comment further along those lines as it is in a quiet period ahead of its year-end 10-K filing with The Securities and Exchange Commission. As for the fourth quarter, Rockwell will record special charges on an after- tax basis of $105m as part of its discontinued operations. Of these charges, $95m is related to the plant closure and layoffs. Other charges for the quarter will include $55m due to modem inventory write-offs and $20m related to intellectual property litigation reserves. Meanwhile, the company asserted that its core automation and avionics and communications businesses are on target to meet previously-announced earnings goals of $2.30 per share (before special charges) in fiscal 1998. It also said it is still on track to realize an additional $100m in pre-tax savings next year from the restructuring it announced in June which saw 5,000 jobs cut (CI No 3,441).
