Agere Systems Inc. on Wednesday (Sept. 29) said it would reduce its workforce by 500 employees and reiterated its plans to shut down its wafer fab if it cannot find a buyer for the plant.
The workforce reductions at Agere (Allentown, Pa.) include administrative functions, sales, marketing and product development personnel. Last week, reports surfaced that Agere would cut 282 jobs. The company had 6,600 employees before the cuts.
In addition, the company said it would cease operations in its wafer manufacturing facility in Orlando, Fla., by the end of December 2005 -- if a sale of the facility cannot be arranged by that time. The facility currently employs approximately 600 people.
In 2002, the company had announced plans to sell this facility as an ongoing operation, but has not yet found a suitable buyer, according to Agere.
In total, the company expects to take total restructuring charges and expenses in the range of $340-to-$360 million associated with these actions. Approximately $130-to-$140 million will be recorded in the fourth quarter of fiscal 2004, ending Sept. 30, and the remainder to be incurred in subsequent quarters.
With these actions, the company expects to reduce its quarterly research and development and selling, general and administrative expenses to approximately $170-to-$175 million by the third quarter of fiscal 2005, beginning in April.
Agere also reaffirmed that revenues in the September quarter are still expected to be in the range of $420-to-$445 million, which was the guidance provided in July. The company expects revenues for the first quarter of fiscal 2005, ending Dec. 31, 2004, to be sequentially lower by approximately 5 percent.
Amid posting strong results for the second quarter as well as reporting a weak outlook for the third, Agere in July said it had reorganized its operations and eliminated one product group.
"While our actions to reduce the workforce are clearly very difficult for employees, they were absolutely necessary to align our expenses with our revenues," said John Dickson, president and chief executive of Agere Systems, in a statement. "The issues we faced with three major customers now seem to have broadened into an industry-wide inventory correction, as reflected by a spate of earnings warnings from most companies in our industry."