Tuesday, Semiconductor-based process control and testing equipment maker KLA-Tencor Corp. (KLAC) said it plans to cut about 15% and reduce expenses about $165 million to $170 million from their peak as the economic crisis worsens.
The Milpitas, California-based company said that the workforce reduction is one among many cost-reduction actions the company is taking in order to lower the company's quarterly operating expense.
Rick Wallace, chief executive officer of KLA-Tencor, said, "We will continue to monitor the demand environment and make the necessary adjustments to weather this downturn, help optimize our profitability, maintain our strategic focus and strengthen our competitive position."
KLA-Tencor said that the initial restructuring charge related to the job cuts is estimated to be in the range of about $15 million to $20 million, almost all of which is related to estimated severance costs associated with the workforce reduction.
The company believes that all the charges would end in future cash expenditures and the company would pay out in fiscal year 2009.
Further, KLA-Tencor expects to incur additional restructuring charges, severance costs and other related expenses related to the workforce reduction at least through the remainder of fiscal year 2009, but is unable to estimate the aggregate amount of such additional charges at this time.
For the first quarter, KLA-Tencor reported a 78.12% drop in profit, which included impairment charges of $12.36 million, non-cash, stock-based compensation of $34.38 million and tax charge of 0.62 million from employee stock options.
Job cuts have been common in almost all sectors, battered by the ongoing credit crisis in the economy. Citigroup's most recent workforce reduction is one of the biggest single corporate reactions to the economic meltdown. IBM has the biggest job cut history, when it said plans to reduce 60,000 employees in 1993.
According to the U.S. Bureau Of Labor Statistics, unemployment rate for the month of October reached 6.5% totaling 10.1 million officially unemployed citizens.
KLAC closed Tuesday's regular trading session at $16.81, down $0.56 or 3.22% on a volume of 5.15 million shares. The stock has been trading in the range of $16.67 - $51.85 for the past 52 weeks on a 3-month average volume of 5.31 million shares.
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