Applied Materials to cut 1,700 workers
The world's largest chip equipment maker will lay off about 10 percent of its work force because of the lingering downturn in the semiconductor industry.
Many high-tech companies have instituted job cuts in the past 12 months, including Dell Computer, which resorted to layoffs for the first time in its history.
Demand for technology products began to plummet in August 2000. Although some chip companies have recently indicated that sales have begun to stabilize, most executives and analysts have said that the overall demand picture remains unclear.
Chip equipment stocks recently started to rise on vague hopes of a turnaround, but a number of analysts say that optimism is premature and that business won't pick up until the second half of 2002. Santa Clara, Calif.-based Applied will begin to notify affected employees Thursday. About 450 positions will be eliminated at its Silicon Valley operations; 600 more will be cut at its facilities in Austin, Texas.
Applied has already implemented a number of cost-reduction measures this year, including temporary plant closures, voluntary separation packages and salary reductions. But the company said that further cost cutting was necessary.
"Unfortunately, the continuing downturn requires us to make some tough decisions to align our operations with current levels of demand for semiconductor equipment," CEO James C. Morgan said in a statement. "While the short-term business environment is uncertain, we are confident in the long-term prospects of our industry."
In its most recent quarter, which ended Oct. 28, Applied reported a loss of $82 million, or 10 cents a share, including nonrecurring items. Excluding those items, the company earned $22 million, or 3 cents a share--a 90 percent drop from a year ago. Sales for the quarter fell to $1.26 billion from $2.92 billion in the same period last year.