By Kristin Jones
TranSwitch Corp. (TXCC) has named a new board chairman, and unveiled a restructuring plan aimed at saving $8 million in employee-related costs and other areas.
The company, which makes digital and mixed-signal semiconductor products, did not give details about its restructuring efforts, but said they will result in charges of around $1.6 million in its second and third quarters, primarily for employee-related costs and lease obligations.
TranSwitch tapped Richard J. Lynch, former chief technology officer at Verizon Communications Inc. (VZ) and, before that, Verizon Wireless, as chairman of the board and chairman of the executive committee to replace Gerald F. Montry.
Montry will remain a member of the board.
"TranSwitch is a company with significant opportunities and challenges," said Lynch. "We are on the cusp of realizing the benefits of the transition to a business based on high speed video connectivity. At the same time, we have seen a continual decline in our legacy telecom businesses which has put pressure on our financial condition."
The company said it plans to immediately implement a restructuring plan aimed at generating annual savings of around $8 million, beginning in the third quarter of 2012. Of this amount, $4.6 million will come from reduced employee-related costs, with the remaining $3.4 million from other cost-savings initiatives.
"By taking these significant actions, we are further increasing the focus of our investments on our expected opportunities for revenue growth, while also minimizing future capital needs."
TranSwitch reported recently that its first-quarter loss widened as both product and services revenues fell.
The company said on Monday that it expects second-quarter revenue of $3.5 million to $4.0 million. Analysts polled by Thomson Reuters recently predicted revenue of around $4 million.
Shares were up 2.8% in after-hours trading to $1.12. Through Monday's close, the stock was down 66% so far this year.
Write to Kristin Jones at firstname.lastname@example.org