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Vitesse Semiconductor (Nasdaq: VTSS) was down US$2.70 at $35.07 in morning trading Thursday, after announcing plans to cut 12 percent of its 1,280-person workforce. Top executives will also take 10 to 25 percent pay cuts, the company said.
The Camarillo, California-based communications chipmaker said that the move reflects "current market conditions that are adversely affecting the company," and will result in a charge of $1.5 million to $2 million to results for the third quarter ending in June.
"This action was necessary in light of the slowdown in customer 
demand and
the need to size the company to previously announced revenue expectations,"
said president and chief executive officer Lou Tomasetta.
Vitesse, which sells its products to network equipment manufacturers, has fabrication plants in Caramillo and in Colorado Springs, Colorado.
In April, Vitesse reported declines in revenue and pro forma earnings for the second quarter ended March 31st, saying that a "dramatic reduction in demand" from communications and data storage customers resulted in the first sequential revenue drop in more than eight years.
Revenue for the quarter totaled $121.8 million, up 21 percent from a year earlier but 26 percent below the preceding quarter. Income before amortization and other charges fell to $18.8 million, or 10 cents per share, from $24.4 million, or 13 cents, a year earlier.
"Visibility in the near term at a majority of our customers continues to be
weak and we do not expect a reversal in this trend in the current quarter,"
Tomasetta said in announcing the results.
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