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ARC details restructuring plan

Posted: 02 Jul 2009     Print Version  Bookmark and Share

Keywords:IP core  processor  systems IP  embedded sub-system 

ARC International will lay off 35 employees and shut down several of its locations in a major restructuring that sees the licencor of multimedia IP cores reduced to 115 direct staff, excluding its Adaptive Chips joint venture in India. The company also announced it is readying a new processing range that will be launched in November.

ARC said its 600 processor range, which on average uses 25 per cent less power than its nearest competitor for embedded sub-system applications, will be the basis of an instruction-set compatible new generation development aimed at a further halving of power-performance ratio. The new processor range will be designated the ARC 6000 series.

Also in November, ARC plans to refresh its ARC 700 series of processors.

In a trading update Tuesday, ARC said current trading remains in line with expectations, with revenues within the target range of Rs.44.09 crore to Rs.58.78 crore (£6.0 million to £8.0 million) for the six months ended 30 June 2009.

The company said that while trading conditions remain challenging, with lengthy sales cycles, "we continue to sign deals and generate royalty revenues."

The restructuring involves the formation of an Advanced Software Group (ASG) in St Petersburg, Russia, based on the company's subsidiary, Alarity Inc., which will focus on new areas of IP as well as continuing its codec development.

An Advanced Technology Group (ATG) will also be established in ARC's San Jose operation to focus on hardware development and systems IP.

The rationalisation and makeover was signalled early last month following the departure of Carl Schlachte and the appointment of Geoff Bristow as CEO, who said at the time he would start with a strategic review of all operations.

ARC also said it will make "an immediate transition to virtualisation and teleworking," such that its premises will only consist of the ASG, ATG, and a network of sales offices in St Albans, Israel, Russia, Taiwan and elsewhere.

All other existing ARC sites will close.

The company's five data centres will be rationalised into two, delivering an operational annualised cost saving of approximately £0.5 million from the second half of this year.

In addition, ARC will now be conducting two-way licencing deals with many of its customers and collaborators in a partnership strategy to be known as "IP-in/IP-out" in order to accelerate the time-to-market of its devices.

A better outlook
The company said these operational and strategic changes mean that the financial outlook will be boosted and that, excluding Sonic Focus, the EBITDA for the six months ended 31 December 2009 will be "at least breakeven."

The Sonic Focus business, which remains an early-stage software venture and is separately managed, is expected to make a loss before interest, tax, depreciation and amortisation of approximately Rs.5 crore ()£0.6 million ($1 million) for the six months ended 31 December 2009.

The actions are expected to generate annualised cost savings of Rs.48.99 crore (£6 million), with benefits being immediately realised in the second half of 2009.

Commenting on the moves, Richard Barfield, Chairman of ARC International, said: "Whilst there remains a great deal of work to do, these actions will significantly improve operational performance and strengthen the company's financial position and outlook."

-John Walko
EE Times Europe

For application notes and technical articles on processors, visit Embedded Design India.

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