Divisional strategy to fight downward trend at Mitel

Mitel is to separate its semiconductor and systems businesses, following weak revenues and profits from the systems division.

Strong semiconductor sales bolstered Mitel Corp's second quarter results, with semiconductor turnover up 39 per cent on the same period last year to $194.3m and net profits up by 142 per cent to $40.2m. The semiconductor division's buoyant performance was set against a lacklustre showing by the Communications Systems division, which turned in revenues and operating income down on the same quarter last year. As a result, Mitel Corp's overall revenues were up just 3 per cent to $359.8m, with net income down to $6.6m compared to $12.5m for the second quarter last year. The Mitel board has announced that it will separate the two divisions, which have been diverging in terms of customer base, technology roadmap, investment requirements and competitive needs. Mitel is forecasting that semiconductor sales will grow by 30 per cent during the coming year, boosted by innovative products like the company's recently-announced Voice over Internet Protocol (VoIP) chipset. By contrast, it expects systems sales to be 20 per cent below fiscal 2000.