Entropic to close and consolidate several global facilities

Entropic announced plans today to close and consolidate several global facilities, a move that would impact approximately 23 percent of Entropic’s headcount. In its official release, Entropic said these plans are intended to align its cost structure around providing more focused engineering, R&D and product development programs.

Today’s actions, which are expected to be substantially completed by the fourth quarter of 2014, will place a higher concentration of engineering, R&D and product development efforts in San Diego, Irvine and San Jose, California, with specialized and local efforts maintained in Shanghai and Shenzhen, China and Belfast, Northern Ireland. Entropic will close major engineering sites in Austin, Texas; Israel; India; and Taiwan. By consolidating sites, Entropic anticipates it will be able to reduce product development complexity, create immediate operational efficiencies, and lower structural overhead costs.

Entropic offered approximately 30 percent of the staff in the facilities closing an opportunity to relocate to one of its California sites and expects to have approximately 500 employees at year’s end. Entropic is offering transition assistance to those impacted by the restructuring.

“Our actions today, while difficult to make as they affect our team of dedicated, talented employees, will enable Entropic to better target resources, improve short-term performance and accelerate our path to profitability while maintaining the proper level of investment in product development, the commercialization of new products, and general customer and design-win support,” said Patrick Henry, president and chief executive officer, Entropic.

Beginning in the fourth quarter of 2014, Entropic expects to realize approximately $6 million in quarterly savings, primarily in operating expenses mainly related to personnel and facilities expenses, with annualized savings in those same areas projected at $24 million.

The Company expects to incur a total pre-tax restructuring charge of approximately $5 million, of which roughly 75 percent is expected to be cash expenditures.

Today, Entropic also announced it lowered its previously announced financial guidance for the second quarter of 2014. Entropic now expects revenue for the second quarter to be in the range of $50 million to $51 million.

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