Applied Materials looks to trim work force

The chipmaking equipment leader says it will ask up to 1,000 employees to leave the company on a voluntary basis.

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Chipmaking equipment leader Applied Materials said Thursday it will ask up to 1,000 employees to leave the company on a voluntary basis.

Separation offers will be made primarily to workers in Santa Clara, Calif., and Austin, Texas, and will include a pay and benefits package, the company said.

Like many of its peers, Applied Materials has been hit by the slowing economy and has faced sluggish orders from its semiconductor customers.

Although the company has implemented a series of cost-cutting measures over the last several months, including restricting travel, implementing hiring freezes and reducing the number of contractors it uses, "the continued slowdown in demand for semiconductor equipment requires further action by the company," Applied Materials said in a statement.

Analysts said the move was not entirely unexpected.

"We're going into a slower period for the next several months if not several quarters, and they want to prepare for that," said Eric Ross, an analyst with Thomas Weisel Partners. "It's better to be surprised on the upside and have to ramp up quicker than they thought. They want to keep their profitability up to high levels in the face of the slowdown."

Last month, Applied Materials beat lowered expectations for its fiscal first quarter but warned of rough times ahead.

During a conference call after its earnings announcement, executives said orders for chipmaking equipment began to slow in mid-January.

The company projected then that revenue for the current quarter would come in at $1.9 billion to $2 billion, with earnings between 32 cents and 37 cents a share. Analysts polled by First Call had called for Applied Materials to post revenue of $2.4 billion and earnings of 49 cents a share.