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InFocus Announces Major RestructuringExecutive Departures and DLP Thin-Display Market Withdrawal Announced
InFocus has a hot brand and even a hotter image, but this public company has struggled financially during 2005. The company posted a loss the first two quarters of 2005. In the first quarter, there was a loss of $14 million on revenues of $137 million, and in the second quarter, there was a loss of $19.6 million on revenues of $135 million.
The 2004 results were looking up compared to a bleak 2003. In the 2004 fiscal year, revenues were $648.9 million and net income was $7.6 million, compared to a net loss of $109.5 million or $2.78 per share, in 2003.
Now, the company is taking drastic steps to realign the business and announced changes among some very key players. John Harker, Chairman of the Board, will step down but will remain on the Board. Departing are Mike Yonker, Executive Vice President and Chief Financial Officer, and Scott Hix, Senior Vice President of Worldwide Sales.
It also appears layoffs will happen, and quickly. According to the announcement, InFocus is evaluating headcount and other spending with plans to reduce operating expenses by 20 to 25 percent.
And in a surprise move, InFocus announced the company will stop investing in development of thin display business (direct-view and rear-screen business). InFocus was an early technology leader with its DLP displays, but according to the announcement, pricing pressures were too much. A trip to Sears over the weekend confirms that -- almost half of the large screen TVs on display were DLPs. $2,500 gets you a 52-inch Toshiba.
Here is the official announcement:
InFocus Announces Restructuring Plans; Company Makes Management Changes and Exits Ultra-Thin Rear Projection Display Market
WILSONVILLE, Ore.--(BUSINESS WIRE)--Sept. 16, 2005--InFocus(R) Corporation (Nasdaq:INFS) today announced a comprehensive restructuring plan as part of an overall initiative to focus the business with the goal of returning the company to profitability in the first half of 2006.
As part of these actions, the company is simplifying and reducing the cost of its management structure by making the following changes in executive leadership:
-- Mike Yonker, Executive Vice President and Chief Financial Officer, is leaving InFocus. Roger Rowe, who has been Vice President, Corporate Controller since joining the company in April 2002, has been promoted to Chief Financial Officer effective immediately. To ensure a seamless transition, Mike will be with InFocus through December 31, 2005.
-- The position of Senior Vice President of Worldwide Sales is being eliminated resulting in three regionally-focused sales organizations reporting directly to Kyle Ranson, Chief Executive Officer and President. As a result, Scott Hix has chosen to resign and is leaving the company effective September 30, 2005.
-- The product line structure is being discontinued and being replaced by a simpler, more cost effective functional structure. As a result, Steve Stark has been promoted to Vice President of Engineering to provide consolidated leadership to our engineering team.
-- John Harker and the remaining members of the Board of Directors have reached mutual agreement that he step down as Chairman of the Board effective September 30, 2005. John remains a member of the Board of Directors.
In addition to executive management changes, the company is also today announcing its intention to take actions in other areas to simplify its business and reduce operating expenses by between 20 and 25 percent from second quarter of 2005 levels. Today, specifically the company is announcing the following actions:
-- Due to pricing pressures in the thin display market, the company will cease investment in developing thin displays leveraging its proprietary technology and exit the market for these products. As a result, the company expects to record a third quarter charge of approximately $8 million related to write-downs of inventory, tooling and manufacturing equipment associated with these products.
-- The company expects to record an additional $4 million in inventory charges for the third quarter related to write-downs of other excess inventory and spare parts, remanufactured projectors, and identified excess component exposures identified during the contract manufacturing transition from Flextronics.
-- The company is currently evaluating investment in headcount and discretionary program spending in all areas of the company infrastructure to reduce operating expenses by 20 to 25 percent. These reductions are expected to occur over the next few months with the majority of these reductions taken as swiftly as possible. As a result of these actions, the company expects to record restructuring charges of approximately $7 million.
"Our performance to date has made it clear that the time for decisive action is now. To return the business to profitability, we must become a more focused company. While some of these actions may limit short-term revenue growth opportunities, we must make the changes necessary to have a healthy core business," said Kyle Ranson, Chief Executive Officer and President, InFocus Corporation. "I am confident that we are taking the right steps to regain financial success."
Commenting on the executive changes, Kyle said, "John Harker, Mike Yonker and Scott Hix have made significant contributions to InFocus providing leadership to build the company into a global market leader during their tenure. I thank them for their past contributions and wish them the best."
Gary Kayye, CTS is Chief Visionary at Kayye Consulting, Inc., a Chapel Hill, NC-based marketing consulting firm that serves the ProAV and Home Theater markets. In addition to strategic marketing consulting, Kayye Consulting, Inc. is also a training development company. Gary can be reached via e-mail at [email protected] or through his Web site at www.kayye.com.
Related Keywords:InFocus, DLP, projectors, public company, struggled financially, loss, Restructuring, layoffs