EXHIBIT 99.1
[LOGO OF SEMTECH]
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NEWS RELEASE
SEMTECH REAFFIRMS SECOND QUARTER GUIDANCE;
COMPLETES INVENTORY AND PRODUCT LINE REVIEW
3:30 p.m. PDT
Tuesday, June 26, 2001
NEWBURY PARK, CALIFORNIA, June 26, 2001 - SEMTECH CORPORATION (Nasdaq: SMTC)
today reaffirmed that revenue for the second quarter of fiscal year 2002 will be
in the range of $38.0 to $40.0 million and earnings, prior to the costs
discussed below, should be approximately $0.06 to $0.07 per diluted share.
Jack Poe, Semtech's chairman and chief executive officer commented, "In the
past three months, Semtech's outlook for second quarter revenue has been reduced
by approximately 50 percent to our current outlook of $38.0 to $40.0 million.
This is consistent with the highly publicized weakness in the overall industry
caused by the lingering effects of excess inventories and slowing demand. We
have aggressively reduced manufacturing rates to account for the lowered revenue
forecasts and our inventories have now been critically appraised and scrutinized
given our outlook."
On May 22, 2001, the Company announced that it would conduct a thorough
review of its inventories, product line strategies and new product roadmaps.
The Company has completed this review, and based upon current customer
forecasts, it now expects to incur costs of approximately $14.0 million in the
second quarter for the write-down of inventory and the discontinuation of
certain commodity and application specific standard products. The Company will
attempt to sell discontinued products over the next two quarters. To the extent
the Company is successful in selling such inventory at greater than recorded
amounts, such benefits will be disclosed.
In the last ninety days, the Company's high performance product line has
experienced a dramatic change in expected demand driven by a sharp reduction in
orders from manufacturers of automated test equipment (ATE). Production rates
for this product line were set to support materially higher forecasts. As a
result, there is more inventory on-hand and at outside foundries for certain
devices than is expected to be sold. In many cases, customers are expected to
migrate to new, advanced technology devices from Semtech for their next
generation ATE systems.
Additionally, Semtech's protection product line has been impacted by the
significant deceleration in the communications equipment end-market. As this
market rebounds, customers are expected to move to more highly integrated
products now being introduced by Semtech, which will leave excess inventory of
certain current protection products.
Finally, the Company has transitioned its power management product line to
higher complexity, higher margin products targeted at portable systems, high-end
desktop computers and servers, and telecommunications equipment. Resources are
focused on accelerating design wins for these products. To further this
strategy, Semtech is exiting certain commodity power IC product segments. Also,
the power management product line has been impacted by product generation
skipping, which has rendered certain products obsolete.
The Company has completed the reduction in headcount that had been
announced on May 22, 2001. As previously indicated, the second quarter costs
associated with this headcount reduction will be approximately $1.1 million.
It is expected that this reduction will save the Company approximately $1.2
million per quarter.
"The write-down of inventories reflects the dramatic change in our
customers' forecasts over the last ninety days, especially in the ATE and
communications infrastructure end-markets," added Jack Poe. "The charge not
only adjusts our inventory valuation to reflect these changed forecasts, but
also focuses Semtech's sales and field engineering resources on designs which
utilize our proprietary, high gross margin products. Over the past few months,
the Company has shed excess capacity, dramatically reduced operating costs and
taken action to strengthen the balance sheet. New design wins show overall
higher dollar content with multiple product lines engaged, and indicate Semtech
should be positioned to achieve its long-term revenue and profitability goals as
industry conditions begin to recover."
The Company plans to release results for the second quarter of fiscal year
2002 on August 21, 2001, after the market closes.
About Semtech
Semtech Corporation is a leading supplier of power management, transient
protection, system management, high-performance and advanced communications
semiconductor products for portable and high-speed communications applications.
Safe Harbor Provision
Statements contained in this release that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements, including
projections and forecasts for revenue and gross margin, involve risks and
uncertainties that could cause actual results to differ materially from those
projected. These risks and uncertainties include worldwide economic conditions,
the timing and
duration of semiconductor market upturns or downturns, demand for personal
computers, cellular phones and automated test equipment, demand for
semiconductor devices in general, competitors' actions, relations with large
strategic customers and suppliers, manufacturing costs and yields, demand for
the Company's products in particular, and risks associated with the businesses
of major customers. Other factors that may cause actual results to differ from
the forward-looking statements contained in this press release and that may
affect the Company's prospects in general are described in the Company's filings
with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise forward-looking statements to reflect subsequent
events or changed assumptions or circumstances.
Investor Relations Contact
John Baumann, Treasurer, Telephone: 805-480-2010