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DigitalOptics Cutting Workforce 40%

SAN JOSE, Calif., Nov. 14, 2012 — DigitalOptics Corp. (DOC) will close its facilities in Tel Aviv, Israel, and cut its workforce outside Asia by up to 40 percent as it focuses on its microelectromechanical systems (MEMS) camera module business for mobile phones, parent company Tessera Technologies Inc. announced today.

In addition to closing its Israel facility, the company plans to pursue the sale of, or "other strategic alternative" for, its facility in Charlotte, N.C. The plants in Israel and North Carolina are not central to the company's MEMS camera module production.

DOC's manufacturing facility in Zhuhai, China, is not affected. The action means reducing its workforce outside of Zhuhai from 450 workers to 270, which could result in a cost savings of between $15 million and $18 million annually by the second quarter of 2013, the company said.

In January 2011, Tessera announced a reorganization of DOC that included reducing its workforce by up to 15 percent to focus on what it said were key growth opportunities for DOC's extended depth of field, zoom and MEMS-based autofocus features. In August 2011, the company announced it would close its Yokohama, Japan, development facility.

DOC acquired Vista Point Technologies, a camera module manufacturer based in Zhuhai, from Flextronics International in June for $29 million (See: DOC Acquiring Mobile Camera Module Assets in China) to help build DOC into a camera module supplier for mobile phones. In September, it announced that Dr. Farzan "Bob" Roohparvar had been replaced as DOC president on an interim basis by Chief Operations Officer Logan Saverimuthu (See: Roohparvar Out as President of DigitalOptics)

In its third-quarter 2012 earnings released earlier this month, Tessera reported that DOC had earned $14.8 million in revenue, up 64 percent from $9 million in the third quarter of 2011. It attributed the increase to camera module sales from the Zhuhai facility. Overall, Tessera reported a loss of $1.1 million for Q3 2012.

Tessera said it has incurred "significant operating losses" from DOC. Its operating loss for the nine months that ended Sept. 30 was $58.5 million. The company lost $83.5 million for the same period in 2011.

"Our goal at DOC is to become a significant supplier of next-generation camera modules for mobile phones," said Robert A. Young, president and CEO of Tessera Technologies, in a statement released today announcing the workforce cuts. "Camera module features and functions have increasing importance to consumers in the mobile phone market. The changes announced today will focus DOC on that market and are an important part of driving the business towards profitability."

DOC said it will spread the staff reductions and facility closings over the next two to three quarters and expects to incur charges of approximately $4 million to $5 million in the fourth quarter of 2012 and $1 million to $2 million in the first quarter of 2013.

For more information, visit: www.tessera.com or www.doc.com


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