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Texas Instruments on Monday said it would cut 3,400 jobs as the chipmaker reported an 86% drop in profit and braced for what could be a "period of prolonged economic weakness."
In releasing its fourth-quarter financial results, TI said it would reduce its workforce by 12% through 1,800 layoffs and 1,600 voluntary retirements and departures. The company expected to take a charge $300 million for the job reductions.
The latest round of cuts, along with layoffs the company announced in October in its wireless business, was expected to reduce expenses by $700 million a year. "We are realigning our expenses with a global economy that continues to weaken," Rich Templeton, chairman, president and chief executive of TI, said in a statement.
TI supplies processors for telecom equipment, conference-room projectors, and high-definition televisions. Templeton said the company is taking the prudent course of preparing for a long-term economic downturn.
"We are not counting on a near-term economic rebound for improvement," Templeton said. "The actions we are taking to reduce expenses and inventory will position TI to deliver solid financial results, even in a period of prolonged economic weakness."
TI plans to make most of the job cuts in its internal support operations and noncore product lines, focusing its remaining resources on developing and supporting its analog and embedded processing products. "We believe these are the areas that will drive TI's future growth and allow us to achieve our financial objectives," Templeton said.
Besides the slow economy, TI is reeling from a shift in strategy by some of its top customers to buy products from multiple vendors, the Dow Jones news service reported. For example, Nokia, its biggest customer, is now buying products from Broadcom and STMicroelectronics.
TI's net income in the fourth quarter fell to $107 million, or 8 cents a share, from $753 million, or 54 cents a share, during the same period a year ago. Revenue in the quarter fell 30% to $2.5 billion from $3.6 billion.
For the first quarter of this year, TI forecast revenue from $1.62 billion to $2.12 billion and earnings ranging from a loss of 11 cents a share to a profit of 3 cents a share. The company plans to update its outlook on March 9.
TI is the latest in a string of tech companies to announce layoffs because of the global economic slowdown. Thousands of layoffs have also been announced by Sprint, Intel, Microsoft, and others.