Spansion has emerged from Chapter 11 bankruptcy later than planned, but it is now a leaner, more profitable company.
The California maker of NOR flash memory chips, which are mainly used in mobile phones, filed for U.S. bankruptcy protection a little over a year ago after its CEO quit and it failed to find a buyer. Since then, it has slashed payrolls and debt in a bid to return to profitability.
The plan has worked. Spansion has posted operating profits in each of the past four quarters and pared its debt to US$480 million from $1.5 billion when it entered bankruptcy protection in March of last year. The company has also cut costs by laying off thousands of workers. Spansion was the second major chip maker to file for bankruptcy amid the global financial crisis, after German DRAM maker Qimonda.
"We are pleased to have emerged from Chapter 11 a stronger, more focused company. As a result, we are better able to serve our customers," Spansion said in a statement Monday.
Spansion started as a joint venture between microprocessor maker Advanced Micro Devices (AMD) and Fujitsu. In 2005, AMD decided to spin off Spansion because flash memory was less profitable than its main microprocessor business.
The bankruptcy reorganization changes ownership of the company. Spansion's stock became worthless last year amid the proceedings, and the company was forced to issue new shares to people to whom it owed money. Now that Spansion has emerged from bankruptcy protection, it can file for a new stock market listing.
The company also emerges more profitable. Spansion failed to turn a profit from the time it was spun-off from AMD to the time it declared bankruptcy, but has posted net profits in the past two quarters.
Spansion's net profit in the first quarter of this year was $3.7 million, compared to a $512.6 million loss during the same time last year. Revenue was $277.3 million, down from $399.6 million. Spansion also reported a net profit of $4.3 million for the fourth quarter of last year.
The recession hit the chip industry hard. Memory chip manufacturers such as Spansion and Qimonda are normally hit harder during downturns because of the massive amounts of money they have to spend to build new chip factories, which cost around US$3 billion each.
Worldwide chip revenue fell 10.5 percent year-on-year to $228.4 billion last year, according to Gartner, the first time the industry has ever seen two-consecutive years of revenue declines. Industry revenue bottomed in the first quarter of last year and strengthened throughout the second half of the year.