MACOM restructuring plans include layoffs, exit from datacom module sales

The company expects to save approximately $50 million annually once it has made all of the changes.

MACOM Technology Solutions Holdings, (MTSI) has announced a restructuring plan that will see the company lay off approximately 250 employees, close facilities, and exit the data center optical module and transceiver space. The company expects to save approximately $50 million annually once it has made all of the changes. The news comes alongside a restating of guidance for the company’s fiscal third quarter that sees MACOM management expecting to miss revenue guidance by a bit less than $15 million at the midpoint.

The approximately 250 hourly, salaried, and management employees who will suffer from the job action represent about 20% of MACOM’s workforce. The layoffs will hit the research and development, production, sales and marketing, and general and administrative ranks. “Substantially all” of the targeted employees have learned of their fates, the company says. The headcount reduction will coincide with the closing of seven product development facilities, including locations in France, Japan, the Netherlands, Florida, Massachusetts, New Jersey, and Rhode Island.

MACOM management says the company also has decided to halt the design and development of datacom optical modules and subsystems. The company expects to remain active in the datacom arena through the supply of semiconductor ICs and photonic devices, including supply of semiconductor components to optical module vendors. MACOM’s move echoes that of Lumentum, which sold its Oclaro Japan datacom optical module business to Cambridge Industries earlier this year in favor of serving that space with optical components (see “Lumentum to sell certain Oclaro Japan optical transceiver lines to Cambridge Industries and Lumentum closes datacom module business sale to CIG”).

MACOM moved aggressively into the optical domain over the last several years, aided by the acquisitions of such photonics suppliers as BinOptics and FiBest (see “MACOM to add laser technology via BinOptics acquisition” and “MACOM jumps into TOSAs/ROSAs with FiBest acquisition”). The company’s website continues to list a range of lasers, photodectors, receivers, planar lightwave circuits, and optical subassemblies among its product lines. The company also continues to list its Laser Photonic Integrated Circuits (L-PICs; see “MACOM CWDM4 L-PIC targets 100G data center networks”).

Company management say they expect approximately $14 million in restructuring charges, including $7 million for employee severance obligations, as a result of its planned actions. Most of these charges will be incurred during the third fiscal quarter of 2019. Speaking of which, the company has reduced its guidance for the third fiscal quarter of 2019. Revenues are now expected to fall between $107 million and $109 million, versus the previously guided $120 million to $124 million. MACOM cites the ban on sales to Huawei for the anticipated shortfall, alongside fewer shipments to certain distribution channel partners.

Non-GAAP gross margin is now expected to be between 39% and 41% (versus the previous guidance of 53% to 55%) and non-GAAP adjusted earnings per share is now expected to fall between a loss of $0.41 and $0.45, figures that don’t include the impact of the restructuring. The company has earlier guided non-GAAP adjusted earnings per share of as a loss of $0.08 to a loss of $0.04.