Freescale announced financial results for the third quarter ended September 2008. The net sales were $1.41 billion, compared to $1.47 billion in the second quarter of 2008 and $1.45 billion in the third quarter of 2007.
- Microcontroller net sales were $408 million in the third quarter of 2008, compared to $460 million in the second quarter of 2008 and $465 million in the third quarter of 2007.
- RF, Analog and Sensor net sales were $261 million in the third quarter of 2008, compared to $280 million in the second quarter of 2008 and $256 million in the third quarter of 2007.
- Networking and Multimedia products net sales were $307 million in the third quarter of 2008, compared to $312 million in the second quarter of 2008 and $281 million in the third quarter of 2007.
- Cellular net sales were $344 million in the third quarter of 2008, compared to $337 million in the second quarter of 2008 and $349 million in the third quarter of 2007.
- Other net sales were $89 million in the third quarter of 2008 compared to $83 million in the second quarter of 2008 and $95 million in the third quarter of 2007.
The reported loss from operations was $3.37 billion, compared to a loss of $202 million in the third quarter of 2007. The operating loss for the third quarter of 2008 included non-cash charges related to an impairment to goodwill and intangible assets totaling $3.37 billion. During the third quarter of 2008, in connection with the Company’s decision to explore strategic options for its cellular products business and the resulting impact on its net sales, as well as the potential impact from weakening market conditions affecting its other businesses, and the lower market capitalizations of its peer group, the Company concluded that indicators of impairment existed with regard to its intangible assets and goodwill.
These intangible assets and goodwill were established in purchase accounting at the completion of the merger in December 2006. Consequently, the Company recorded non-cash impairment charges for intangible assets and goodwill totaling $3.37 billion in the third quarter. The goodwill impairment charge is an estimate which the Company expects to finalize in the fourth quarter of 2008. The company has initiated a series of restructuring actions to streamline its cost structure and re-direct some research and development investments into growth markets. These actions will reduce headcount in our supply chain, technology, marketing and general and administrative functions.
The Company currently expects to incur cash restructuring charges of approximately $175 million and corresponding annualized cost savings in excess of $400 million. These restructuring costs and savings are inclusive of the severance actions undertaken in the third quarter of 2008.
