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Agere Wields Jobs Axe

Agere Systems Inc. (NYSE: AGR.A) has reacted to its trading slump by cutting 500 jobs and putting a deadline on another 600 (see Agere Trims 500).

In July, the firm, which currently employs about 6,600, said it was expecting inventory issues to hit revenues from three major customers in its fiscal fourth quarter ending September 30 (see Agere Stung by 3G (Again)). But now CEO John Dickson says those issues "have broadened into an industry-wide inventory correction" that has caused financial pain across the chip sector.

The initial 500 cuts will be "across the business, including administrative functions, sales, marketing and product development," the company said in its official statement. Agere believes it will save about $20 million per quarter in R&D and SG&A (selling, general, and administrative) expenses by the third quarter of fiscal 2005 as a result of the staff reduction. These costs currently run to $195 million per quarter.

The other 600 jobs under threat are at the company's wafer-making plant in Orlando, Fla., which has been up for sale since 2002. Now Agere says it will close the site if a buyer isn't found by the end of calendar 2005.

Agere will book charges of $340 million to $360 million as a result of these combined actions, with $130 million to $140 million to be recorded in the quarter ending September 30 (tomorrow) and the remainder of the charges in subsequent quarters.

The firm also said revenues in the fourth quarter are expected to be between $420 million and $445 million, which is in line with average analyst expectations of $432 million.

The news sent Agere's share price down 3 cents, nearly 3 percent, to $1.11 this morning, approaching its 12-month low of $1.

— Ray Le Maistre, International News Editor, Light Reading

deauxfaux 12/5/2012 | 1:14:10 AM
re: Agere Wields Jobs Axe The axe needs to take off the leadership team. John and his guys have been making the wrong calls, executing poorly and failing to hold themselves accountable for enough years that the board needs to force a change.

The new team needs to purge the remaining refugees-from-a-three-stooges-movie in charge of the BUs. Only then will the smart guys that remain be able to start rebuilding

sailor 12/5/2012 | 1:14:08 AM
re: Agere Wields Jobs Axe It is hard to believe John Dickson is still in charge at Agere. When Agere was still part of Lucent, the cry was that Lucent was dragging them down. The shareholders are so used to non-performance that they must be apathetic about the management. I still have lots of friends at Agere and they deserve better.
Dr.Q 12/5/2012 | 1:14:06 AM
re: Agere Wields Jobs Axe The press release indicated that a large number of the lay-offs were 'high level managers'. That would be good if it were actually true. [Agere continues to sufffer from the 'too many chiefs and not enough workers' syndrome.]
My friends on the inside report that they have seen very few Managers actually depart, indicating that Agere is engaging in the old AT&T doublespeak where
MTS (member of technical staff) = manager,
i.e. an engineer is a 'manager' because he is not in the unionized workforce.
It seems that a lot of the 'managers' that were cut were actually front line working engineers, not Higher Up desk jockeys.

- Q
deauxfaux 12/5/2012 | 1:14:05 AM
re: Agere Wields Jobs Axe The best politicians were unaffected once again. The worst of the worst seem to have improved their lot somehow. It is amazing what goes on in a company when no one cares about serving customers.
big_daddy_cool 12/5/2012 | 1:14:05 AM
re: Agere Wields Jobs Axe I heard that most Tech Managers and Directors survived too, while quality engineers were let go, yet again.

Honestly, I don't see how the marketing and business types could survive this. This is such an obvious failure in marketing it's unreal. Too much read-channel and not enough SAN. Too much 3G and not enough Wi-Fi. The engineering talent was there to make things happen.

The marketing guys will have to borrow John Kerry's windsurfboard because they keep "missing the boat"
deauxfaux 12/5/2012 | 1:14:04 AM
re: Agere Wields Jobs Axe Without a doubt, Agere has (had) some of the most intelligent people I have ever had the pleasure to work with. John Dickson is very smart and a real gentleman. But John and his leadership team haven't made money for Agere's shareholders and he should be fired along with SK,AN and a few others. They chased out the few remaining execs that were willing to take a stand, shut down the money losing businesses and concentrate on new areas of growth.

My sources tell me that this layoff was like all of the others. A token number of management heads went out the door, the bulk of the cuts happened with the technical guys and no one at Agere really knows whether this surgery will make "the patient" any better or not.

Destruction of value is an awful process to watch.
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