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updated 6:23 AM BST, Jul 24, 2014
Technology and life sciences news from the Cambridge cluster

Zoran staff feel brunt of CSR exit from DTV as jobs toll set to reach 800

Two people carrying suitcases with wireless logosCSR is to slash a further 400 jobs following a decision to discontinue investing in digital television system on chip (DTV SoC) and silicon tuner work, having already committed to a 400 reduction after its acquisition of Zoran in the summer.

A spokesperson said the effect would not be felt in Cambridge, UK, but it will in the US and elsewhere as the majority of the redundancies relate to what was Zoran, the company CSR acquired for £300m in August this year

CSR expects greater profitability as a result of a move it said would achieve $60m of operating cost reductions on an annual basis, news that was well received by the stock market and analysts, but will be less so at Zoran, where over half of the company's staff will have lost their jobs by the middle of next year.

CSR's headcount when the merger closed was 3,200 with Zoran employees accounting for around 1,400 of the total.

Zoran has been loss-making for each of the past three financial years to 31 December 2010 with the DTV and silicon tuner markets. CSR had already dropped its initial asking price for Zoran from £420m to £300m following downgraded financial projections for 2011.

Now CSR will exit a large chunk of the Zoran business, a move that analysts have said makes sense and should improve profitability.

In a stock market statement, Joep van Beurden, CEO of CSR, said the company was taking a disciplined approach to capital allocation and cost control.

He said: "We have decided to withdraw investment from the DTV SoC and silicon tuner businesses and are focusing our investment where we have a strong position in platforms in the areas of voice & music, automotive infotainment, cameras, document imaging, gaming and Bluetooth low energy.

"We will also continue to invest in a range of products for attractive growth markets including handsets and computer peripherals.

"The actions we have announced today will allow us to increase our focus on the areas of the business that offer the best prospects for delivering sustained and profitable growth."

Through Zoran, CSR holds a strong position in the DTV SoC market, around fifth in the world according to JP Morgan Cazanove, but that's not enough to give it scale says the analyst and CSR adviser, meaning profitability would be low or non existent and dilutive to CSR's margin.

While the market exit will is not expected to affect revenues for 2012, from 2013 onwards the revenue is likely to rapidly fall off according to JP Morgan.

However, as the Zoran business is loss-making and the reductions will potentially make business profitable in 2012 and then beyond, JP Morgan says it will improve company gross margin as TV is lower gross margin than the company average, and should improve profitability.

JP Morgan said though CSR could have turned around the TV business, the turnaround would have taken a long time and the TV market has historically been low margin so the end game was not attractive.

CSR says it expects to have around 2,400 personnel worldwide at the end of the second quarter 2012 and had around 3,200 personnel at the end of September 2011. By noon the company's stock price had risen 10.9 per cent, up 18.2 pence to 185p a share on the back of the news.