A little bombshell from AMAT. (Translated: don't kid yourself - the semi-equip industry is in real trouble. that's been my position for several months and as repeated often I see things getting worse not better. This was released after the market close on Friday. I've never understood what Fidelity et al were doing buying these stocks in mid-Jan, Feb etc - then again their T/O is over 500% so they will likely do the dumping thing if they have not already. The big big question is will my "specialized" buds in the chip industry make it through all right... Their businesses should do fine - the stocks unfortunately (as GP hinted at and I agree) may be all lumped together... Perhaps the wishful thinking on my part for a decoupling of the sectors won't happen... really would not surprise me though... Anyway we'll find out soon enough... Monday, Tuesday, Wed. and the entire summer season should be tres interesting.)
biz.yahoo.com
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Applied Materials cuts costs via shutdowns
By Therese Poletti
SAN FRANCISCO, May 8 (Reuters) - Applied Materials Inc., the world's largest maker of semiconductor equipment, is
using intermittent company-wide shutdown days to cut costs amid an industry slowdown, and industry sources said on Friday it
was offering some employees voluntary severance packages.
Sources said the company was trying to cut as much as 10 percent of its workforce with voluntary severance packages, and
industry executives speculated that if not enough employees take the current package, cuts in the company's 16,300 workforce
were likely to ensue.
The Santa Clara, Calif.-based company sent an e-mail to employees a few weeks ago, advising them that there would be some
mandatory company shutdown days this year, sources said.
''They also offered voluntary retirement packages to everyone, saying 'step forward if you want this, we will accept up to 10
percent,''' said one industry source. ''The hope is they lose some upfront due to this package... Then if they don't reach the
goals, they might go to layoffs.''
Applied officials did not immediately return calls seeking comment. Most of the company was closed Friday for a
company-wide shutdown. The company reports its second quarter earnings on Tuesday and details on cost cuts are expected.
''Up until March, Applied was quite adamant that they did not want to lay anybody off,'' said another industry source who
asked not to be identified. ''They wanted to shorten the work week because when the upturn came, they would have
everybody in place. In 1996, they made a mistake of laying people off and the turnaround came and they were caught
short-handed.''
But March turned out to be worse for the semiconductor industry than Applied and others had predicted, with chip customers
cancelling orders as they cut capital spending.
Applied, like many other semiconductor equipment companies, has seen a slowdown in the Asia Pacific region, particularly in
Korea, where the world's biggest memory chip makers are battling a market glut of memory chips and an economic crisis.
But the slowdown in semiconductors is not limited to Asia. In the United States, furious price cutting by personal computer
makers in order to move inventory is taking a toll on chip companies.
The world's largest chip maker, Intel Corp. (INTC - news), said last month it will cut its workforce by 3,000, mostly by
attrition and some layoffs. Intel also said it would not increase its capital spending as much as it had planned and will now spend
$5.0 billion in 1998, instead of $5.3 billion.
National Semiconductor Corp. (NSM - news) said late last month that it will cut 1,400 jobs, or 10 percent of its workforce,
through layoffs and attrition, citing slumping sales of computer chips, mostly in the PC-related area.
Texas Instruments Inc. (TXN - news) also recently said it will keep its capital spending flat this year at $1.2 billion.
''The industry was much weaker than people thought at the beginning of the year, and the fundamentals are continuing to
deteriorate,'' said Robert McCormack, a partner at Integral Capital Partners, a closed-end fund in Menlo Park, Calif.
''The effects from Asia are lasting a lot longer than people thought,'' said Min Pang, a Cowen & Co. analyst. ''People had
expected the U.S. to remain firm, and then TI, Intel and Motorola cut (their capital spending plans)...It's because of global
softness.''
The news of the latest tightening at Applied comes just five months after the company celebrated its 30th anniversary in
November with a free concert for employees by Bob Dylan and his son Jakob's band The Wallflowers.
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shane |
