With restructure and the expected increase in efficiencies, the company anticipates realizing about a 13% decrease in labor expenses.
For the past eight quarters, the company has been successfully executing on its transformation plan based on a set of strategic initiatives. These initiatives include: 1) being first to market with next generation advanced technology products, 2) broadening the product portfolio through both organic and inorganic growth, and 3) building Virage Logic into a company that is a trusted IP partner in the industry through deeper engagements with long standing IDM and foundry partners, said Alex Shubat, president and chief executive officer (CEO), Virage Logic. In the past, our product line development was concentrated around custom IP products for each of our customer’s solutions. The issue with this model is one of fundamental scalability. Therefore, in the past two years, we have focused our product efforts toward the creation of families of feature-rich standard product IP that meet the requirements of a broader customer base without the need for customization. The result has been a dramatic improvement in net return on investment of our research and development spending. As we continue our transformation, we are continually optimizing our operations to take full advantage of efficiency improvements.
Shubat continued, We are confident that the transformation initiatives we have been executing on and the actions we are taking with this restructure will enable us to retain our leadership position. In addition, by preserving our strong balance sheet, we are well positioned to further execute on both our organic and inorganic growth initiatives as the semiconductor industry rebounds.
The company’s restructure will result in closing of its R&D centers in New Jersey and Minnesota. The development that is previously done at these locations will be transferred to company’s larger R&D centers located at Fremont, California headquarters or development centers in Armenia and in India. Additionally, the company is consolidating its non-volatile memory (NVM) development to its Seattle, Washington R&D center that was founded as a result of the acquisition of Impinj Inc.’s NVM IP business in June 2008.
The restructure aligns the company’s global sales organization to better meet the current customer requirements and the future market opportunities. The changes complement addition of five new sales representative firms covering the Silicon Valley, Japan, Israel, Italy, France, Scandinavia and the UK that were announced in the previous quarter. The company will carry on tuning its sales operations with a mix of direct sales staff and the sales representatives to optimize its market penetration and decrease selling expenses.
Shubat concluded, This restructure, together with our on-going transformation initiatives, underscores our commitment to continually improve our global operational efficiencies and reduce our overall cost structure to solidify the foundation for our future growth and scalability. In today’s uncertain economic environment, we are even more vigilant in the monitoring and management of our resources to ensure we remain competitive.
