Stock in struggling semiconductor equipment maker Applied Materials fell nearly 6 percent today, one day after announcing that it will cut 15 percent of its workforce and post a net loss during the fiscal fourth quarter due to a restructuring charge.
As reported, the company will cut 2,000 positions worldwide beginning Wednesday and continuing through late October, when its fiscal fourth quarter ends.
Executive salaries at Applied Materials also will be cut by 10 percent, as the company comes off a third quarter during which both its revenues and profits tumbled.
The company's stock fell 1.875 points on the news to reach 29.5625, hovering above its 52-week low of 29.375.
As previously reported, there has been some speculation within the analyst community that Applied Materials was preparing to lay off thousands of workers. Sources had indicated earlier that the cuts could go upward of 3,000 workers, or more than 21 percent of the company's workforce.
"An unprecedented convergence of three factors--difficult conditions in Asia, industry over-capacity, and the movement toward sub-$1,000 PCs--is continuing to cause customers to delay equipment deliveries and investments in capacity and strategic programs," James C. Morgan, Applied Materials chairman and chief executive, said in a statement.
Earlier this month Applied Materials reported third-quarter earnings of $70.6 million or 19 cents a share, excluding restructuring charges, compared with net profits of $145.2 million or 38 cents a share posted a year ago. Revenues for the quarter fell 16 percent to $884 million, compared with $1.06 billion reported a year ago.
The company has taken a number of steps since December to shore up its operations, from a previous voluntary layoff plan to mandatory time off. Applied said that it expects to complete its restructuring plans by the end of the fourth quarter and that it will take a net loss for the severance costs at that time.