| | "Novellus Fires Workers as Chip-Equipment Sales Plunge"
(Update3)
By Cesca Antonelli
San Jose, California, Jan. 10 (Bloomberg) -- Novellus Systems Inc., which makes tools that build circuits in semiconductors, fired an undisclosed number of people this week as the chip-equipment industry copes with its worst slump.
Novellus told the workers Tuesday, spokesman Bob Climo said. The company had 3,500 employees worldwide before the cuts. He declined to comment on the number of employees affected.
Chief Executive Rick Hill last year chopped executive salaries by as much as 25 percent, consolidated some facilities and trimmed his temporary workforce to help preserve profit during the slowdown. He told analysts on a November conference call that the equipment maker would consider firing people this year, as chipmakers reduce spending on new tools while their own sales slip.
``They've been feeling the squeeze,'' said Ed White, a Lehman Brothers Inc. analyst who rates the stock a ``market perform.'' ``With the weakness dragging on, they had to take another hard look at the workforce.''
The firings will take place across all job functions and company locations. Hill is out of town and unavailable to comment, though he will talk about the reductions on a conference call to discuss the company's fourth-quarter results Jan. 22, Climo said.
Banc of America Securities analyst Mark FitzGerald estimated that 400 to 450 jobs will be eliminated. ``It shows it's far worse than they anticipated,'' he said.
The shares of San Jose, California-based Novellus fell 54 cents to $43.88 today. They've added 9 percent in the past year.
Applied Cuts
The chip-equipment industry is in its steepest slump in history, and analysts keep pushing back projections for when demand will pick up. Toolmakers like Novellus and larger rival Applied Materials Inc. have been forced to cut jobs after months spent trying to dodge such moves.
``Novellus avoided this action as long as possible,'' Climo said. ``We did everything we possibly could.''
Applied last month announced plans to fire 1,700 people, or 10 percent of its workforce, after eliminating 2,000 jobs earlier last year. Lam Research Corp. said in August it would cut 10 percent of its staff.
Chip-equipment companies have had average workforce reductions of 15 percent to 20 percent so far, Lehman's White said. A 15 percent trim at Novellus would be 525 employees.
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