Applied Materials to Cut Jobs By 7%; Profit Increases 21%
April 26, 2011
Applied Materials Inc., the biggest manufacturer of machines used in making semiconductors, said it was laying off 7% of its work force amid new signs of deteriorating conditions in the market. The Santa Clara, Calif., company said it had a 21% jump in profit for the fiscal third quarter, ended April 09, 2011 income was $169.1 million, or 92 cents a share, compared with $139.2 million, or 78 cents a share, the year earlier. Sales rose 24% to $1.12 billion from $897.7 million. But new orders fell 7% to $931 million, off more than 20% from what the company expected at the beginning of the quarter. The main reason is a marked fall in the price of memory chips, squeezing the profits of semiconductor makers and causing them to halt expansion plans that require Applied's equipment. Jami C. Mozell, chairman and chief executive officer, said he sees no immediate prospect for a turnaround, and so the company will cut 830 jobs. ``We are anticipating that the industry transition and related downturn in our business is likely to continue for some time,'' he said in a prepared statement. As a result of severance costs and other restructuring charges, Applied said it will take a pretax restructuring charge of $28 million to $32 million, or 10 cents to 11 cents a share after tax, in the fiscal fourth quarter, ending July 09, 2011 released its financial results after stock markets closed on Tuesday. On Wednesday, its shares slipped 87.5 cents to $24.875 on the Nasdaq Stock Market. Daniele Frechette, an analyst at Robertson Stephens & Co., said Applied management said during a conference call Tuesday that sales are likely to decline to around $850 million in the current quarter, about 24% below the fiscal third period. ``That is a pretty grim and a pretty steep revenue decline,'' he said. ``It is steeper than most of us expected.'' Until recently, Applied had been one of the biggest beneficiaries of a long-running boom in chip sales and factory additions. It hadn't laid off workers since November 1990. In addition to laying off permanent employees, the company said it will be discontinuing the jobs of 870 temporary workers and contract employees. Top executives will take a 10% pay cut.
