ParthusCeva to cut jobs as 2003 revenue expected to fall

ParthusCeva, the Dublin-based technology company formed through the merger of Parthus and the Ceva division of US firm DSP Group, will cut more jobs over the coming months.

The company, which designs microchips, confirmed yesterday it would take an additional restructuring charge of between $3.5 million (€3.51 million) and $5 million in the fourth quarter and reduce its cost base.

Management would give no detail on the likely number of extra job reductions yesterday or other cost-cutting measures. These would be provided within the next three to four weeks, the firm said.

Earlier this year, Parthus said it would record a $3 million restructuring charge following its decision to shut its radio frequency division with the loss of 65 jobs.

Ms Elaine Coughlan, chief financial officer of ParthusCeva, said this would reduce costs by between $10 and $14 million per year. Operating costs would be $40-$44 million in 2003, down from an estimated $53.5 million on an annualised basis in the third quarter.

The company did not disclose expected revenue or profit targets for the combined firm in 2003 but Ms Coughlan said ParthusCeva would remain profitable on a pro-forma basis following cost cuts.

But full-year revenues for the combined firm were forecast to dip in 2003 compared with 2002 because of continued uncertainty in the microchip industry.

ParthusCeva chief executive Mr Kevin Fielding told analysts the business climate was still "tough".

But he said ParthusCeva would offer customers a unique value proposition because it gave them an opportunity to bring their products to market faster.

He said the consumer segment of Parthus business, which provides technology for a range of products such as the Microsoft Xbox, was experiencing an uptick in demand.

ParthusCeva had 135 licensing agreements with more than 90 customers and 74 per cent of these deals were royalty bearing, the company said.

Mr John Coolican, an analyst with Merrion Stockbrokers, said the company would probably reduce the total number of jobs in the firm to below 300, from the current level of 315 staff.

But he said the firm was well placed for the expected upturn in the semiconductor industry and it was currently undervalued.

ParthusCeva shares began trading on the Nasdaq and London stock exchanges yesterday following the completed merger.

The shares were listed at a price of $5.10 on the Nasdaq at the beginning of the day. At the session close, the stock price was $5.27.