Sigma Designs announces major restructuring actions
Sigma Designs announced restructuring activities intended to refocus its operating expenses and accelerate the return to profitability. These actions, which will focus on streamlining the company's Connected Smart TV Platforms business will commence in the second half of October 2017 and are expected to be fully implemented by the end of the fourth quarter of fiscal year 2018, ending February 3, 2018. Sigma currently estimates that these actions will result in lowering quarterly non-GAAP operating expenses from approximately $26M in the second quarter of fiscal 2018, ended July 29, 2017, to an approximate $17M-$18M starting in fiscal year 2019. The company anticipates these activities will reduce annual fiscal year 2019 non-GAAP operating expenses by approximately $34M from expected fiscal year 2018 levels. Restructuring will result in, among other things, reducing headcount of between 200 to 250 positions worldwide and the consolidation of certain facilities. The Company expects to incur total one-time charges for severance and lease termination of approximately $8M-$10M over the third and fourth quarters in the current fiscal year. The company expects all other restructuring and restructuring-related charges to be between $5M-$7M, which includes estimated asset impairment charges and other costs. In addition, the company is continuing with its strategic alternatives review process. "As part of our business review, we have decided that in the near-term, the most prudent action is to significantly reduce expenses," said Thinh Tran, President and CEO of Sigma Designs, Inc. "This will not only bring expenses in line with our current revenue levels, but we believe it will also improve our ability to pursue other strategic alternatives. I recognize this will be a difficult transition period for the Sigma team. However, I am confident these actions will deliver the improved financial performance that our shareholders expect while continuing to support our existing major customers."