Dallas, Texas 10/10/2013 (Financialstrend) – Investors and employees of Japanese major ON Semiconductor Corp (NASDAQ:ONNN) were taken in by the closure of plant announcement made by the company on October 8. In a mandatory SEC filing, the company disclosed that it has decided to shut down its “SANYO semiconductor assembly and test facility in Japan. The tentative timeline indicates the plant will seize to exist around June 2014 time frame. Most of the slack in production would be absorbed by other production facilities of the company located in other parts of the globe. This reduction in workforce and plant shut down has been necessitated by the management desire to increase its operational efficiencies by developing consolidated high volume facilities.
The plant shut down will also involve the elimination of close to 210 employees over the next 9 months. The shutdown will cost the company close to $16 million with respect to severance cost and other expenses in the immediate aftermath of the shut down, but would start to account saving of $4 million in terms of savings per quarter from 2015.
Post the shut down announcement, the stock of this $3.15 billion Semiconductor manufacturer has attracted the bears. The shares of this firm have shrunk by close to 5% in the past 5 days of trading and by close to 14% in the past 90 days. Sales have registered a quarter on quarter on, dip of 7.6% and have stagnated at $2.76 billion over the previous 12 months trailing period. In spite of the huge sales turnover the company has accumulated a net loss of $55 million.
As of 12 Noon on October 9, the share price of the stock had settled at $6.87 which translates to a 1.29% dip from the day’s starting price. Current valuations seem to indicate that the stock is trading 21% lower than its 52 week low pricing.