From today's St. Louis Post-Dispatch
<<MEMC posts loss of $147 million
Tuesday, July 28, 1998
By Virginia Baldwin Hick
Of The Post-Dispatch
MEMC Electronic Materials on Monday reported a second-quarter loss of $147 million, including more than $105 million in after-tax restructuring costs. Revenue was down 17 percent, to $202 million.
The world's second-largest producer of silicon wafers also announced Monday it will cut production of smaller-diameter wafers by:
* Closing a plant in Spartanburg, S.C.
* Canceling plans for a plant in Malaysia.
* Pulling out of joint operations in China.
The closures, plus a previously announced voluntary termination program, will result in MEMC's cutting about a fifth of its work force worldwide. The company projects annual savings of about $60 million through the reduction.
The announcements were made after the stock market closed. MEMC's share price closed Monday at $10.25, up 18 3/4 cents.
MEMC customers - who make silicon chips from the wafers - have been turning to wafers of 8 inches in diameter and larger for more efficient production, said Ludger M. Viefhues, chief executive. "It has become apparent we would have excess small-diameter wafer capacity even after the semiconductor market begins to recover," he said.
Earlier this year, MEMC, based in of O'Fallon, Mo., announced it would cut jobs through a voluntary termination program throughout the company. Deadlines for volunteering to quit passed in April and May. About one in 10 of the 2,400 O'Fallon workers took the severance package .
Sam Duggan, spokesman, said some of the business from the shuttering Spartanburg plant will find its way to O'Fallon. The work can be done with the present O'Fallon workforce, he said. But the move should make further layoffs less likely. Other plants in Malaysia and Italy also will get some of the production from the closed plants.
A company statement said it expected these elements contributing to oversupply of wafers to continue in the short term: excess capacity in the semiconductor industry; weakness in Asian and Japanese economies; and flat sales of personal computers.
MEMC's gross margin was a minus 1.9 percent, compared to last year's second quarter margin of 12.9 percent. The company statement said MEMC's company-wide cost-cutting, restructuring and focus on larger wafers should help it break even on its margin perhaps as soon as the third quarter.
The company should be in position to catch the next upturn, said Viefhues, the chief executive.
"This will be the third year of downturn in the semiconductor industry," said Duggan. "A number of analysts believe revenues will be negative in the industry this year.
"We don't have any prediction" for MEMC. "But until the industry begins to turn around, it will be difficult for the raw material suppliers to do so."
Part of MEMC's long-term strength lies in its research and development of
12-inch wafers, which chipmakers are expected to use within the next three
years for even more efficient production. Some of that research and development
is being conducted at the O'Fallon plant.
Copyright (c) 1998, St. Louis Post-Dispatch>>
For what it's worth, I believe this company is in real trouble!
Chip |
