DOC to Cease Manufacturing
SAN JOSE, Calif., Jan. 17, 2014 — DigitalOptics (DOC) will cease its remaining mems|cam manufacturing operations as it restructures, cutting hundreds of jobs, parent company Tessera Technologies Inc. said Thursday.
The company, with operating subsidiaries in Intellectual Property and DigitalOptics, said it will refocus efforts on monetizing its intellectual property portfolio and technology, including solutions for imaging and MEMS, through a sale, licensing or other means. DOC will return to its core IP and image enhancement business.
The company's workforce will be reduced by more than 300, primarily in Taiwan, the US and Japan. Additionally, its Arcadia, Calif., Rochester, N.Y., Taiwan and Japan facilities will close. DOC will continue its embedded image processing development operations — such as FaceTools, red-eye removal, HDR, panorama and image stabilization products — in Romania and Ireland.
DOC anticipates $50 million to $55 million in restructuring charges, 75 percent of which occurred in the fourth quarter of 2013; the remainder is expected in the first half of 2014. Tessera's quarterly DOC-related operating expenses will be reduced by approximately $17 million, realized in full by the third quarter of 2014.
DOC will incur impairment charges of at least $33 million related to fixed and intangible assets. The majority of that charge is expected in the fourth quarter of 2013 and the remaining in the first half of 2014.
The restructuring follows an in-depth review of strategic alternatives for DOC, conducted in conjunction with the company’s financial advisers, the newly reconstituted board of directors and the new senior management team, Tessera said.
"While the strategic process ultimately did not lead to a sale of the mems|cam business, we achieved solid proof of concept by demonstrating working mems|cam camera modules, including shipping pre-production units that generated substantial customer interest," said Tessera CEO Tom Lacey.
DOC received its first volume production purchase order from China-based smartphone OEM Guangdong Oppo Mobile Telecommunications Corp. Ltd. in October for its smartphone imaging system. This uses DOC's mems|cam module MEMS technology to provide fast imaging to smartphones and is made using semiconductor processes. The outcome of this remains unclear.
The restructuring and related changes are expected to be completed during the first and second quarters of 2014.
Tessera and DOC dramatically cut spending last year via the sale of its micro-optics business to Flir Systems Inc. in August. Flir acquired the Charlotte, N.C.-based business for $14.9 million.
Included in that deal were fabrication equipment and more than 200 patents and pending applications associated with the design and production of complex optical surfaces, substrates and low-cost components, Flir said. This came after Tessera posted a nearly $90 million operating loss on revenue of $41 million in 2012.
For more information, visit: www.tessera.com
/Buyers_Guide/DigitalOptics_Corp/c16741