SST to Reduce Headcount by 120 or 17%

SST (Silicon Storage Technology, Inc.) announced that, as a result of weakening demand caused by the rapid slowdown in the global economy over the past several weeks, the company now expects revenue for the fourth quarter of 2008, based on information currently available, to be in the range of $56 to $58 million, versus previous estimates of between $63 to $68 million.

SST also announced that it is implementing a global reorganization to reflect changes in anticipated levels of business. This action is being taken to further reduce costs of operations, to streamline the organization going forward, and to improve focus on expediting selective new products to the marketplace. SST will reduce its headcount by approximately 120, or 17 percent of its global workforce and expects most of the reduction to be completed by year-end.

SST expects to incur a restructuring charge of approximately $2.8 million, nearly all of which is related to estimated severance costs associated with the workforce reduction. The workforce reduction and other restructuring actions are expected to reduce payroll-related expenses by approximately $13 million in 2009.

The GAAP net loss for the fourth quarter is now expected to be in the range of $0.13 to $0.11 per diluted share with a Non-GAAP net loss, excluding the restructuring charges discussed above, in the range of $0.10 and $0.09 per diluted share.  The company had previously estimated a GAAP net loss in the range of $0.12 and $0.07 per diluted share. A reconciliation of GAAP and non-GAAP estimates is presented below. Additional charges related to inventory reserves, impairment of goodwill or other assets could adversely affect the company’s estimates.

"The recent rapid deterioration in worldwide macroeconomic conditions has resulted in a significant decline in consumer spending, which continues to have a strong impact on sales across all of our product categories," said Bing Yeh, president and CEO. "Considering the uncertainty over how prolonged this downturn will be, we are taking decisive and necessary actions to control our costs and to reduce our workforce in order to align our organization to the realities of the current demand environment. This action is taking place in all locations worldwide, across all product lines and in all functional areas of our company. This reduction in workforce will not change in any way our continuous focus on supporting the current and future requirements of our customer base and investing appropriately in our technology roadmap in order to enhance our competitive position. We believe that we can achieve these goals even more effectively by streamlining our organization and strategically reallocating our resources, while improving our profitability at the same time. Over the past 19 years, we have established ourselves as an industry leader with superior SuperFlash technology, deep customer relationships and a talented team of employees dedicated to a common goal of excellence. In recent years, we have also successfully launched strategic initiatives and began to ramp up our new products in RF power amplifier and NANDrive solid-state storage devices. Our fabless business model, in conjunction with our technology leadership, has been resilient during past business cycle downturns. We are confident in our ability to weather this downturn and look forward to emerging even stronger from this challenging environment."