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ST to shed 4,500 jobs

Posted: 29 Jan 2009     Print Version  Bookmark and Share

Keywords:manufacturing operations  chip industry  layoff  restructuring 

STMicroelectronics Inc. has outlined a major cost-cutting effort in 2009, which includes plans to layoff 4,500 jobs amid loss and poor outlook.

In total, ST plans to reduce its costs by over Rs.3,502.55 crore ($700 million) in 2009. The actions are focused on "resizing" the company's manufacturing operations and streamlining expenses. The company also set a capital spending budget of about Rs.2,502 crore ($500 million) for 2009, representing a 50 per cent reduction in comparison to 2008.

ST also reported sales of Rs.11,388.28 crore ($2.276 billion) in Q4 08, compared to Rs.13,489.81 crore ($2.696 billion) in the third period and Rs.13,719.98 crore ($2.742 billion) in the like period a year ago.

Reflecting the sharp downturn in the global economy, the company said Q4 net revenues decreased 15.6 per cent sequentially and 17 per cent y-on-y, "driven by significant weakness across most geographies and market segments, in particular automotive, telecom and computer."

For Q4 08, the company reported an operating loss of Rs.695.51 crore ($139 million) and a net loss of Rs.1,831.33 crore ($366 million), or minus Rs.21.02 ($0.42) per share, compared to the year-ago quarter operating loss of Rs.75.05 crore ($15 million) and net income of Rs.100.07 crore ($20 million), or Rs.1.00 ($0.02) per diluted share. In the previous quarter, ST lost Rs.1,446.05 crore ($289 million) or minus Rs.77.06 ($1.54) a share.

ST also said Q4 08 restructuring and impairment charges totalled Rs.455.33 crore ($91 million) and largely related to previously committed restructuring programmes. ST-NXP Wireless, a joint venture owned 80 per cent by ST, is consolidated into ST's operating results. The fourth and third quarter 2008 financial review includes the ST-NXP Wireless joint venture.

In a statement, president and CEO Carlo Bozotti said: "Fourth quarter net revenues came in at the mid-point of our updated outlook and reflected the accelerated level of order push-outs and cancellations and decrease in demand as the quarter progressed."

Net revenues for the full year were Rs.49,235.81 crore ($9.84 billion) compared to 2007 revenues of Rs.50,036.39 crore ($10 billion). Net loss, as reported, was Rs.3,932.86 crore ($786 million) in 2008, or minus Rs.44.03 ($0.88) per share, compared to a net loss of Rs.2,386.74 crore ($477 million), or minus Rs.26.52 ($0.53) per share in 2007.

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