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Applied To Cut 2,000 Worldwide Restructuring means 4Q net loss santa clara, calif. -- Grappling with lower business volume experienced in its third quarter and lack of visibility ahead, Applied Materials revealed last week that it will cut 2,000 jobs or 15 percent of its global workforce, take a fourth-quarter charge that will result in a net loss and will scale back executive salaries among its top management. Applied said it was assessing its infrastructure when it revealed results for the third quarter earlier this month. The company saw revenues drop from $1.05 billion in the third quarter of fiscal 1997 to $884 million in the third quarter of 1998. Applied had particularly been hurt by a three-week order drought in the period (EN, July 27). Of the 2,000 cuts, Applied will lay off roughly 750 employees at its Santa Clara operations and 600 positions at the company's Austin, Texas, manufacturing operations, with the remainder being eliminated from positions worldwide. The company started notifying employees on Wednesday, Aug. 26. Those employees at other locations worldwide will be notified before the finish of Applied's fourth quarter, which ends Oct. 25. The company has already cut 1,000 from its workrolls through a voluntary separation plan, revealed in June (EN, June 8). The two actions would result in Applied shedding 22.5 percent of its worldwide headcount this year. Executive salaries will be reduced by approximately 10 percent. An Applied spokesperson said the reduction would come from top management, although the spokeperson would not be more specific. The company expects the restructuring plan and associated cost estimates to be completed by the end of the fourth quarter. The company will report a non-recurring charge for the restructuring plan, which will result in a net loss for the fourth quarter. Applied's spokesperson would not get more specific, except to reiterate that the charge would yield a net loss as opposed to Applied suffering an operating loss. First Call estimates, an average of 21 analysts covering Applied, have pegged AMAT earnings per share of 3 cents. "An unprecedented convergence of three factors -- difficult economic conditions in Asia, industry overcapacity and the movement toward sub-$1,000 PCs -- is continuing to cause customers to delay equipment deliveries and investments in capacity and strategic programs,said James C. Morgan, chairman/CEO. "Currently, we are restructuring for a lower expected business volume, while working closely with customers on leading-edge technologies that will position the company for significant growth when the industry rebounds." |