Exar Exits 10GbE NIC Market

Exar Corporation is changing its plans to participate in the data center virtualization market and will stop development of 10 Gigabit Ethernet Network Interface Cards.  

Products affected with this announcement are the Exar X3100 and Xframe acquired from Neterion in March 2010. This move to reduce expenses associated with the 10GbE NIC products allows Exar to focus on products with more significant market traction in the enterprise storage and communications infrastructure markets.

"We made this decision based on a combination of factors, including lack of revenue traction for our data center virtualization products, the increasing investment required for developing next generation 10GbE products, and our interest in ensuring that other better performing investments are properly funded," said Pete Rodriguez, the company’s President and CEO. "Our objective is to continually direct our R&D efforts towards projects with the highest expected return on investment. We estimate this action will reduce Non-GAAP operating expenses going forward by approximately $3.0 million per quarter from our current quarterly guidance range as early as the June quarter, which we expect to enable Non-GAAP profitability in fiscal 2012."

This action is expected to reduce our net sales for the current quarter by approximately $1.0 million. In addition, we estimate restructuring costs to be approximately $11.8 million to $13.6 million comprised of an approximately $8.0 million charge for the impairment of intangible assets and $3.8 million to $5.6 million primarily related to inventory and severance costs.  For purposes of Non-GAAP reporting, we will exclude restructuring costs.

For fiscal 2012, we estimate that net sales will grow in line with industry growth expectations of 4% to 6% over Exar’s fiscal 2011 revenue.