Agere Wields Jobs Axe
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