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LSI Logic to cut 1,200 jobs

The chipmaker announces it will cut about 17 percent of its workforce in an effort to reduce costs to ride out an industry slowdown.

Shares of chipmaker LSI Logic tumbled in early trading today after the firm announced it will cut approximately 1,200 jobs, or about 17 percent of its workforce.

As previously reported, the company said the layoffs come as it is trying to cut costs to ride out the three-year slowdown in the semiconductor industry and the downturn in the global economy.

LSI Logic stock was down 5.15 percent to 11.5, near its 52-week low. The company's shares have traded as high as 30.63 and as low as 10.5 during the past 52 weeks.

The company also reported its third-quarter financials, posting earnings of 15 cents per share, excluding charges from its acquisition of Symbios, compared to 31 cents per share from the year-ago quarter. Analysts had expected the chipmaker to post earnings of 13 cents per share, according to First Call. Including the acquisition charges, however, LSI Logic posted a $2.01 loss per share.

Revenues for LSI Logic, excluding Symbios, were $301 million, down 8 percent from $327 million in the same period a year ago.

"The unprecedented three-year slowdown in the worldwide semiconductor industry and the global economic downturn has made it necessary to implement a comprehensive restructuring plan to reduce costs," said LSI Logic chairman and chief executive officer Wilfred Corrigan in a statement. "The recent acquisition of Symbios is also providing the company with the unique opportunity to position itself for growth once the global industry environment improves."

LSI Logic plans to reduce its wafer fabrication capacity by 30 percent by closing an 11-year-old factory in Tsukuba, Japan, and by reducing asset values at three other facilities.

"Considering that we are presently completing the integration of Symbios and implementing our restructuring plan, we see the fourth quarter as a transition quarter," said Corrigan. "Heading into the new year and beyond, the decisive actions we are taking today are expected to result in greater profitability and a stronger competitive position for LSI Logic in 1999."