Bethel Finance: CSR trims Zoran activities, fires workers

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Bethel Finance news:
Four months after acquiring Zoran for $485 million in cash and shares, Britain's CSR plc (LSE: CSR; Nasdaq: CSRE), today announced that it is closing down some Zoran operations to focus on those that it believes will add value.

In a statement to the London Stock Exchange, CSR said "The company will be discontinuing investment in the areas of digital television systems-on-a-chip (DTV SoC) and silicon tuners, in order to increase its focus on areas of business where it has leadership positions and the ability to deliver differentiated platforms and products."

CSR is also firing employees. The merged company had 3,200 employees worldwide when the deal was closed, and it will slash its workforce by a quarter to 2,400 by mid-2012.

CSR added that it expects savings of $60 million a year in operating costs from the closing of the operations and other efficiency savings. It added that these saving were on top of $55 million in savings from "synergy and rightsizing" following the Zoran acquisition.

CSR reiterated its fourth quarter 2011 revenue guidance of $230-250 million.

CSR's investors in London liked the announcement, and sent its share price up 10% today to ₤1.84, giving a market cap of ₤334 million. The share price closed at $10.42 on Nasdaq yesterday.

Zoran was founded by Dr. Levy Gerzberg. The company developed processors for consumer electronics, such as digital cameras, DVDs, and digital TVs. CSR develops wireless communications solutions. The company's silicon tuner business came through its acquisition of US company Microtune in 2010 for $160 million. Its DTV SoC business goes back even farther.

Zoran's DTV business is carried out in the US, so presumably CSR's layoffs will mostly affect its American employees. However, there have been reports that CSR has already fired scores of Zoran employees in Israel. Zoran had 1,500 employees worldwide at the end of 2010, including 380 in Israel and 100 in Texas, where Microtune is based.

Zoran's DTV business was at the heart of the battle between Gerzberg and its shareholder Starboard Value LP (previously Ramius), which successfully ousted several Zoran directors before the sale of the company to CSR. Starboard accused Zoran's managers of wasting money on unprofitable businesses, including DTV, and that the directors were failing to represent the interests of the shareholders.