Texas Instruments Announces Layoffs, Posts 45% Decline in 1st-Quarter Net
By ELLIOT SPAGAT
Staff Reporter of THE WALL STREET JOURNAL
DALLAS -- Texas Instruments Inc. said first-quarter profit fell 45% on slumping semiconductor sales, and warned revenue would continue to drop sharply in the second quarter.
The chip maker said it will lay off about 2,500 employees, or about 6% of its work force of 42,400, beginning in the second quarter. It will take an unspecified charge in the second quarter for the layoffs, which are expected to yield about $400 million in annual savings.
Texas Instruments Plans to Lay Off at Least 2,000 Amid Soft Demand
Texas Instruments to Close Plant, Lay Off 600 Workers (March 14)
Texas Instruments Says Its Revenue Will Fall 20% From Fourth Quarter (Feb. 27)
"The outlook is bleak because order patterns were very weak throughout the first quarter and continuing into this quarter," said Chief Financial Officer Bill Aylesworth. The company said customers continue to pare down glutted inventories and it is unclear when demand will strengthen.
Net income was $230 million, or 13 cents a diluted share, compared with $421 million a year earlier, or 24 cents. The latest quarter includes a $50 million charge for a voluntary retirement program, severance costs, and closing a plant in Santa Cruz, Calif.
TI reported income before special charges of $317 million, or 18 cents a diluted share. Analysts surveyed by Thomson Financial/First Call expected profit of 16 cents a share.
Revenue fell 8.4% to $2.53 billion from $2.76 billion last year. Still, that was slightly better than the $2.4 billion that TI projected in late February. Semiconductor sales skidded to $2.18 billion from $2.39 billion.
TI said second-quarter revenue will drop 20% from the first quarter. That would result in $2 billion in second-quarter revenue, down 29% from $2.84 billion last year. TI expects pro forma operating income, which excludes special charges, to fall to about break-even for the second quarter.
The results mark a sharp turn for TI, which, like many technology companies, struggled last year to keep pace with surging demand. The company doubled spending on capital projects last year to $2.8 billion. Tuesday TI said it plans to spend $1.8 billion on new factories and equipment this year, lowering the budget for the second time since February.
Semiconductor orders, an indicator of future financial performance, were down 42% from last year, reflecting "weakness across almost all product areas."
The drop in sales was especially marked among wireless-phone manufacturers, the company's largest market. Wireless-chip revenue fell 34% from last year.
Before its earnings release Tuesday, at 4 p.m. in New York Stock Exchange composite trading, TI shares were up 99 cents to $34, well below the 52-week intraday high of $90 reached June 20. In after-market trading, TI shares were quoted at $32.50.
In February, TI began a voluntary retirement program for 2,600 employees, announced a hiring freeze and cut discretionary spending. About 900 employees have accepted the retirement offer, which expired Monday.
Write to Elliot Spagat at elliot.spagat@wsj.com |
