Freescale reorganizes chip unit, denies MPU biz for sale

Mark LaPedus
(02/18/2005 12:03 AM EST)

  SAN JOSE, Calif. — Freescale Semiconductor Inc. has denied rumors in the marketplace that it plans to sell its microprocessor/microcontroller unit amid a major reorganization within its bread-and-butter MCU, analog and sensor product operations.

According to a recent e-mail newsletter from independent distributor Fusion Inc. (Andover, Mass.), the chip spin-off of Motorola Inc. is reportedly looking to shed all or part of its microprocessor/microcontroller unit. "Freescale is currently searching for a buyer for its MPU division," according to Fusion.

A spokesman for Freescale (Austin, Texas) denied the rumor. "That's the farthest thing from the truth," the spokesman said. "We're still committed to it."

Officials from Freescale did acknowledge that the company has reorganized its largest chip unit — the Transportation and Standard Products Group — which consists of its analog, microprocessor/microcontroller, and sensor lines. Applications for these products include the automotive, industrial, PC peripheral and other markets.

The reorganization could prompt the company to cut jobs within the unit. "There may be workforce reductions as we fully implement this," the spokesman said. The cuts would be part of a previously-announced workforce reduction, which involves 1,000 employees, the company said (see Oct. 19, 2004 story).

Meanwhile, in the previous organization, Freescale's Transportation and Standard Products Group had four separate divisions. The group included the 8/16-bit Controller Division, 32-bit Embedded Controller Division, Sensors Division and Analog Division.

Under the new plan — and in an apparent move to streamline the operation — the separate 8/16-bit and 32-bit controller divisions have been combined to form the Microcontroller Division. And, the separate sensors and analog divisions have been combined to form the Sensors and Analog Division.

The changes were made in order for the unit to become "more nimble" and "react more quickly" to customer requirements, according to the Freescale spokesman.

The Transportation and Standard Products Segment reported net sales of $631 million in the fourth quarter of 2004, compared to $611 million in the fourth quarter of 2003 and $650 million in the third quarter of 2004. The segment's operating income was $56 million in the fourth quarter of 2004, compared to $49 million in the fourth quarter of 2003 and $74 million in the third quarter of 2004.

Net sales declined from the third quarter of 2004 due to manufacturing slowdowns among U.S. automotive manufacturers, partially offset by growth in Asia, according to Freescale.

Last month, Freescale reported total net sales of $1.43 billion in the fourth quarter of 2004, compared to $1.37 billion in the fourth quarter of 2003 and $1.43 billion in the third quarter of 2004. Net income was $5 million in quarter, or $.01 per fully diluted share, compared to $98 million in the fourth quarter of 2003 and $57 million in the third quarter of 2004. The fourth quarter 2004 results include pre-tax charges of $5 million related to the separation from Motorola and $79 million for restructuring (see Jan. 18 story).