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Rockwell severs chip unit
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June 29, 1998: 8:47 a.m. ET
Company to cut 3,800 jobs, take $625 million restructuring charge
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NEW YORK (CNNfn) - Rockwell International Corp. said Monday it will cut 3,800 jobs and spin off its struggling semiconductor unit. The company also warned its third-quarter financial results will fall far short of analysts' estimates.
Rockwell (ROK), an electronics control and communications company, said it expects to take a $625 million charge in the third quarter for the restructuring.
Rockwell will spin off its Semiconductor Systems unit to its shareowners. Dwight Decker, president of the unit, will become president and chief executive officer of the new company.
The restructuring is expected to be completed by the end of 1999.
Rockwell said the semiconductor unit will post operating losses for the third quarter and the full year. The company cited a weak PC modem market and a work stoppage at its Newport Beach, Calif., facility.
"The dynamics of Semiconductor Systems are very different from Rockwell's other businesses, including its markets, products, and investment requirements," said Don Davis, Rockwell chairman and chief executive officer.
Rockwell also said it expects to report third-quarter earnings of 45 cents a share, sharply lower than First Call estimates of 68 cents a share. The company earned 56 cents per share in the third quarter a year ago.
Davis said Rockwell's earnings will be "adversely affected" by a $35 million government program charge at its Avionics and Communications division.
Rockwell (ROK) shares closed at 48-7/16, down 1/2 in Friday trading. 
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Rockwell
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