Applied Materials Inc., a chip company that has invested heavily in its emerging solar business, plans to cut 12 percent of its workforce to reduce costs and weather the economic downturn, the company said Wednesday.
The Santa Clara, Calif.-based company reported declines in its fourth fiscal quarter and 2008 fiscal year sales, underscoring the tough times ahead for all of its markets. Applied Materials (NSDQ: AMAT) makes equipment for manufacturing chips, flat panels and thin-film solar panels.
Applied reported fourth-quarter sales of $2.04 billion, down roughly 14 percent from $2.37 billion in the same quarter in fiscal 2007. Its net income fell 45 percent to reach $231 million, or 17 cents per share, from $422 million, or 30 cents per share, in the year-ago period.
For fiscal 2008, the company reported $8.13 billion in sales, a 16 percent drop from $9.73 billion in fiscal 2007. Net income fell about 44 percent to $961 million, or 70 cents per share, from $1.71 billion, or $1.20 per share, for fiscal 2007. New orders also dropped to $9.16 billion for fiscal 2008 from $9.68 billion in fiscal 2007.
Applied, having entered the solar equipment business in 2006, saw the volume production of its first SunFab thin film-making equipment, which is owned by Signet Solar, in the fourth quarter, the companies announced last month. Signet told Greentech Media it had planned to start commercial production by the end of September (see Signet to Start Thin-Film Solar Production).
The financial market turmoil has caught up with Applied, but its impact isn't immediate on its solar business, said Michael Splinter, Applied's CEO, during a conference call with analysts.
"To date, the macroeconomic liquidity issues have had less immediate effect on our solar business. However, we expect a period of pullback and reassessment in early '09," Splinter said (via Reuters).
Applied plans to slash 1,800 positions in its offices worldwide during fiscal 2009. The reduction will generate an annual savings of $400 million, Applied said. The company will reduce the headcounts through attrition, layoffs and other programs.
Applied's shares dropped nearly 6.6 percent to close at $9.95 per share. The company announced its earnings after the market closed and saw its shares decline another 1.41 percent to reach $9.81 per share in after-hours trading.
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