LSI Logic Drops on Plant Closure, Job Cuts

LSI Logic (NYSE: LSI) was down 71 U.S. cents to $17 in morning trading Thursday, after announcing plans to close amanufacturing plant in Colorado Springs, Colorado, a move that will put approximately 500 people out of work.

LSI said the move reflects “the adverse economic climate and the widespreadinventory correction in worldwide communications and storage markets.”

The Milpitas, California-based company makes integrated circuits and storagesystems.

“This decision is precipitated by the weakening national economy, sharpdecline in end demand and the buildup of inventory in the supply chain,”said chairman and chief executive officer Wilfred J. Corrigan. “The maturetechnologies utilized by the Colorado Springs facility have beenparticularly impacted by the decline in the overall economy.”

LSI said it will consolidate manufacturing at its two main plants inGresham, Oregon and Tsukuba, Japan. The company also said that many of the Coloradoplant’s workers will be offered transfers to Oregon.

The plant closing will result in $120 million to $150 million in charges,with a restructuring charge to be taken in the second quarter and othercharges spread over the second and third quarters.

Last month, LSI warned of aslowdown in demand for its products and lowered its outlook for the firstquarter ending in March.

The company said at the time that a “sharp decline” in U.S. customer demand and a “widespreadinventory correction” would hurt results for the quarter. Corrigan said then that communications and storage would be “the growth drivers” whenbusiness picks up.

Also last month, the company announced plans to acquire C-Cube, acommunications processor maker, for stock worth about $878 million.

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