UPDATE 1-ON Semi to cut 250 jobs, cancel senior executives' bonuses

Wed Aug 22, 2012 12:58pm EDT

By Neha Alawadhi

Aug 22 (Reuters) - Power-management chipmaker ON Semiconductor Corp said it will cut about 250 jobs and cancel annual cash bonuses for senior executives, including its CEO and CFO, to reduce costs in a weak economic environment.

ON Semiconductor, which earlier this month reported second-quarter revenue below analysts' expectations on lower orders, is struggling with poor performance at its Sanyo segment.

"The one specific segment that ON is trying to fix is the Sanyo acquisition. It is a business that has been losing money since the acquisition," Robert W Baird & Co analyst Tristan Gerra told Reuters.

The company acquired Sanyo Semiconductor Co Ltd in January 2011 for about $500 million including debt. The division designs, manufactures and sells radio frequency and power-related components used in flash memory devices and touch sensors.

ON had cut 10 percent jobs in the Sanyo division in the second quarter.

Sanyo's business was not growing at the time of the acquisition and it was further impacted negatively by the Japanese earthquake and the Thai floods, Gerra said.

Japanese companies, which are Sanyo's biggest customers, have also not been doing well, he added.

Sony Corp and Canon Inc have cut their full-year operating profit forecast on a strong yen and a weak global economy.

Panasonic Corp, another major customer, slashed workforce by 36,000 last year and is expected to continue cutting jobs.

ON expects to complete most of the job cuts in the current quarter and take a related charge of $11 million to $14 million, it said in a regulatory filing on Wednesday.

The company had a global workforce of 19,442 last year, according to its annual report.

A weak spending environment has pushed several chipmakers into a rough patch, with ON's rivals such as Fairchild Semiconductor International Inc and Cypress Semiconductor Corp forecasting weak growth.

ON Semiconductor shares, which have fallen 14 percent since the beginning of the year, were trading flat at $6.59 on the Nasdaq.

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