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International Rectifier to close El Segundo plant

The semiconductor maker reports a quarterly loss and says it is cutting its global workforce 18%.

February 06, 2009|Martin Zimmerman

International Rectifier Corp. said Thursday it would close its El Segundo semiconductor plant as part of a plan to slash its global workforce 18%.

The El Segundo company announced the closure after reporting a fiscal second-quarter loss of $186.1 million, or $2.56 a share. The company reported a profit of $313,000 in the same quarter a year earlier.

International Rectifier said it planned to eliminate 850 jobs in the current fiscal year, which ends June 30. More than half of those job cuts have already been made.

It is not clear how many of the job cuts will come in Southern California. The El Segundo plant, which is used for research and development and small production runs, employs fewer than 70 people. However, it's likely that jobs will also be trimmed at the company's plant in Temecula, which employs around 600, and at corporate headquarters, where 650 people now work.

The El Segundo plant will be shut and its production capacity shifted to the Temecula plant by the end of 2010. The company also plans to consolidate its operations in Wales. The company said the restructuring would save almost $54 million by the end of 2010.

The cutbacks come amid falling demand for International Rectifier's semiconductors, which are used to manage power consumption in personal computers, video game boxes and other products.

The company said year-over-year revenue from its ongoing businesses slid 26% to $175.8 million during the second quarter and was expected to fall to between $115 million and $150 million during the current quarter.

"While the current business climate remains challenging, we are proactively taking steps to help manage the effects, and I am pleased with the progress the team is making in restructuring the company," Chief Executive Oleg Khaykin said in a statement.

In 2007, then-CEO Alex Lidow and another top executive left the company, and the chief financial officer was fired, amid an internal investigation into accounting irregularities. After completing the investigation on Aug. 1, 2008, the company restated its financial results for all of fiscal 2006 and two quarters of fiscal 2007.

Last year, Vishay Intertechnology Inc. offered to buy International Rectifier for $23 a share, but abandoned its effort in the face of what it said was opposition from the International Rectifier board.

International Rectifier's earnings were released after the close of regular stock trading Thursday. The company's stock was little changed in after-hours trading after climbing 27 cents to $14.09 during regular trading.


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