As macroeconomic challenges continue to impact the semiconductor industry, I am reminded of the lessons learned from prior semiconductor downturns. In particular, three important lessons underscore a company’s ability to successfully manage industry cyclicality and weather the storm:
- Even in a downturn, successful companies deliver highly innovative, differentiated products that enable profitable market share growth
- Leading in a downturn requires perseverance and the ability to realign the company as needed to position for long-term growth
- Successful companies must proactively drive a corporate culture with highly accountable and collaborative leaders to guide the company forward
Today, we announced our Q3 financial results. Despite the macroeconomic challenges, we executed against our revised guidance and achieved non-GAAP earnings per share of 48 cents, non-GAAP adjusted net income of $30.3 million and Q3 revenues of $258 million. However, we were not immune to the challenges facing the semiconductor industry. In consumer applications we experienced declines due to weak global demand. Our more mature wireless business was also significantly impacted due to a product transition made by chipset suppliers. The rest of our segments performed pretty well and we had strong design win momentum with our 400 new design wins.
In order to manage through continuing economic challenges and position the company for the future, we are executing on these three principles.
Deliver innovative, differentiated products that enable profitable market share growth
In order to execute to our strategy to drive profitable market share growth, two years ago we decided to place greater emphasis on high performance products and embedded segments where we can differentiate and achieve a greater return on investment.
We plan to integrate the wireless business into our embedded segment, which already includes wireless applications and infrastructure, while ensuring that our wireless customers continue to receive a high level of support. Our embedded business strategy remains sound. We believe we have a differentiated portfolio well aligned with the needs of embedded customers.
Our proprietary MirrorBit® technology and new class of 65nm products are delivering advanced performance and enabling our customers to create differentiated electronics and an improved user experience. Over the past year, we have introduced several innovative new products, including the
Spansion GL-S family, the highest speed serial NOR products, the Spansion FL-S family, the highest density 4Gb parallel NOR products and new flash file software, the Spansion® FFS™ Flash File System. We have recently completed our first 45nm silicon with our manufacturing partner, SMIC, with positive results, which will allow us to continue to provide customers with high density and cost-effective products in the future. And we are making progress with our NAND products, which we will sample in the first half of 2012 with production in the second half of next year.
Leading in a downturn requires perseverance and the ability to realign the company as needed to position for long-term growth
Fundamental to weathering downturns and navigating through global economic weakness is taking proactive steps to ensure a business is sustainable through the downturn and poised for growth coming out of it. To that end, we are taking actions to improve our manufacturing efficiencies, align the company with current market demand and position the company for future growth. For example, today we announced the consolidation of our test and assembly facilities with plans to transition production from our Kuala Lumpur facility to our Bangkok facility by the end of Q1 2012. This transition is expected to result in a reduction of our global workforce by about 20 percent, primarily due to closing of the Kuala Lumpur facility and about 5 % outside of Kuala Lumpur. We recognize and acknowledge that the site consolidations will affect the personal lives and families of our employees and we do not take this lightly. We are offering competitive severance packages and resources to help them in their career transition.
Our employees have done an outstanding job and we are extremely thankful for their contributions. However, the unfortunate reality of the current macroeconomic situation requires Spansion to realign the company and focus on operational efficiencies.
Successful companies must proactively drive a corporate culture with highly accountable and collaborative leaders to guide the company forward
In times like these, building a strong collaborative culture is more important than ever. It starts with the leadership team. During times of uncertainty and inevitable change, employees look to the leadership team to guide them through the challenging times. We believe it is important to emphasize and live our values (accountability, determination, flexibility, integrity, smart innovation and winning together) throughout all our interactions and energize our people to innovate, execute and do great work for our customers. These are areas we will continue to prioritize, improve and evaluate progress.
I am optimistic about our future and we remain focused on executing our well-defined strategy. We are committed to delivering the best service and highest quality products to our customers, and through this will be agile and aggressive in creating value for all of our stakeholders.
Have you noticed something different at spansion.com? Based on some great information we collected from our customers over the past year, we undertook the task of redesigning our website to make it easier to find the exact information you require. We have a brand new look, updated content, and reorganized information.
Now… as consumers, we want it now. Instant gratification has become the rule as opposed to the exception. Consequently, an “instant-on experience” has become critical for the practical use, and eventual customer satisfaction, of electronics.