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TI to trim headcount as profit falls

Posted: 28 Jan 2009     Print Version  Bookmark and Share

Keywords:cost-reduction  workforce  layoffs  electronic component 

Texas Instruments Inc. has announced that it will trim its workforce by 12 per cent, or approximately 3,400 employees, as it restructures operations following one of the worst sequential and y-on-y quarterly performances in the history of the analogue and digital signal processor company.

The company also warned that it does not expect sales to improve significantly anytime soon due to continuing weakness in the general economy, which helped drive down Q4 revenue 30 per cent from the immediately preceding quarter and 26 per cent from the comparable quarter of 2007.

Net income in the December quarter plunged 86 per cent, to Rs.535.39 crore ($107 million), or Rs.4.00 (8 cents) per share, from Rs.3,782.75 crore ($756 million), or Rs.27.52 (55 cents) per share, in the year-ago quarter. The company said the results included 13 cents per share in restructuring charges.

Excluding the special charges, adjusted earnings per share would have been 21 cents, TI said. Analysts were expecting TI to report adjusted earnings per share of 12 cents.

TI's woeful performance follows equally dismal results posted in recent weeks by many other semiconductor industry heavyweights and high-tech equipment OEMs, including Intel Corp., Advanced Micro Devices Inc., Ericsson and Nokia, all of which also announced fourth quarter revenue fell sharply due to the weakening economy. By promptly cutting workforce, TI expects to bring its expenses more in line with reduced demand, the company said.

"We are realigning our expenses with a global economy that continues to weaken," said Rich Templeton, chairman, president and CEO at TI, in a statement. "By reducing expenses now, we keep TI financially strong and able to invest for future growth."

The extent of the cost-reduction actions being implemented by TI demonstrates how deeply the economic recession is beginning to hurt companies in the electronics industry.

With consumer and corporate demand stalling, most electronic component suppliers are largely working to blind forecasts and have been forced to severely cut production to reduce costs.

In TI's case, the company appears to be aiming most of its costs at non-core businesses and the selling, general and administrative structure.

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