Three-Five Systems shifts base - East Valley Tribune: Business

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Three-Five Systems shifts base

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Posted: Thursday, January 27, 2005 5:51 am

Three-Five Systems, the Tempe-based maker of liquid crystal displays and other electronic products, said Wednesday it will move its headquarters to Redmond, Wash., to cut costs and attempt to return to profitability.

About 30 administrative jobs will be moved to Washington. Another 30 marketing, sales and engineering jobs will remain at 1600 N. Desert Drive in Tempe to serve the company’s customers in the Southwest, said Elizabeth Sharp, vice president of corporate relations.

"While profitability will only be accomplished through a combination of revenue growth and the changes I am announcing today, these actions are a necessary step in that direction," said CEO Jack Saltich in a statement. "They will provide us with the focus and efficiency that will be required as we drive toward our objectives."

The company, which has been engaged in a corporate restructuring for several years, was last profitable in the first quarter of 2001, and the stock price has declined from a high of $8.27 a share last April to close at $1.87 a share Wednesday.

The headquarters transfer will save money by consolidating corporate functions at the same location as the company’s largest U.S. manufacturing operations, Sharp said.

All corporate functions, including finance and accounting, human resources and information technology, will be relocated to Washington. The move is expected to be completed by mid-2005, Sharp said.

In a related move, the company named James E. Jurgens as interim chief financial officer effective Feb. 1, replacing Jeffrey Buchanan, who has decided to remain in Arizona, the company said. Buchanan is the son of Three-Five Systems founder David Buchanan, who retired six years ago.

The younger Buchanan will remain as a consultant for several months to ease the transition, the company said.

Also the company said it is exploring the possible sale of a factory in Manila, Philippines, to reduce excess manufacturing capacity.

Three-Five Systems was founded in 1985 as a spinoff from National Semiconductor Co. and established its headquarters in Tempe in 1986.

Over the past few years, the company has expanded its product lines beyond

from LCD displays to include electronic products such as medical equipment and computer boxes produced on a contract basis for other companies. The strategy was designed to reduced the company’s dependence on a single customer, Motorola, which used Three-Five LCDs in its cell telephones.

Three Five has acquired other companies and has spun off Brillian Corp., which makes high definition televisions. The restructuring has resulted in higher costs than the company planned, Sharp said.

"Any time a company changes its nature and develops a new customer base, that is a monumental change," she said.

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