Spectrum Signal Processing stays independent; lays off 40 staffers
Burnaby, B.C., Canada—Spectrum Signal Processing Inc. recently conducted a strategic review, and decided to remaining independent, while tightening its focus and restructuring its operations to achieve profitability.
Burnaby, B.C., Canada— Spectrum Signal Processing Inc. recently conducted a strategic review, and decided to remaining independent, while tightening its focus and restructuring its operations to achieve profitability. Spectrum had talked with several companies interested in acquiring part or all of the company, but none of the offers were better than executing its own standalone plan.
'Our strategic discussions over the past six months have underscored the fact that acquirers are seeking financially accretive businesses in the current business environment. As a result, our primary goal for 2004 is to regain profitability while operating on a standalone basis,' says Pascal Spothelfer, Spectrum's president and CEO. 'The first steps in achieving this goal are to focus the Company's business activities and cut operating expenses.'
Under its standalone strategy, Spectrum will restructure its business to focus on its wireless systems product line, which generated approximately $16.1 million in revenue during 2003. Investment in the company's voice over packet product line will be suspended, and Spectrum will continue seeking to divest this business group. Finally, the company is implementing plans to reduce annual operating costs, excluding depreciation, restructuring and other charges, by approximately 27% or $4 million compared to 2003. These cost reductions will allow Spectrum to achieve positive operating earnings in 2004, excluding amortization, restructuring and other charges, with wireless product revenue levels comparable to 2003.
As part of its restructuring, Spectrum will reduce its staff by approximately 40 people, including four VP in its business groups. Senior management positions in the new organization will be filled internally. The company expects to incur $2.5 million to $3.5 million in restructuring and other costs, including non-cash items over the next six to 12 months. Spectrum intends to pursue an equity financing in the near term to fund its restructuring activities.
'By focusing on our flexComm software-defined radio product line, we expect to continue demonstrating leadership and meeting the growing needs of our core markets and customers,' adds Spothelfer. 'We’ll exploit the opportunity to increase revenues at attractive margins by capitalizing on the numerous wireless programs the company has already secured. This revenue stream is expected to provide Spectrum with the ability to invest the capital required to pursue additional wireless programs, particularly in the expanding defense communications market.'
Control Engineering Daily News Desk
Jim Montague, news editor