Electronics Production | January 27, 2009
TI to reduce staff numbers by 12%
TI also announced it is making reductions in employment because demand has continued to weaken with the slowing economy. Employment will be reduced 12 percent through 1800 layoffs and 1600 voluntary retirements and departures.
Charges for these employment reductions will be about $300 million. Annualized savings from these reductions, plus those announced in October for the restructuring of the company's Wireless business, will be about $700 million after all reductions are complete in the third quarter of 2009. "We are realigning our expenses with a global economy that continues to weaken," said Rich Templeton, TI chairman, president and chief executive officer. "By reducing expenses now, we keep TI financially strong and able to invest for future growth. "Most of the reductions will come in our internal support functions and non-core product lines so that a greater percentage of the dollars we spend will go directly toward developing and supporting 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. "We are not counting on a near-term economic rebound for improvement. 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. When the economy strengthens, we'll be pleased that we focused aggressively on our core product lines." Texas Instruments announced fourth-quarter revenue of $2.49 billion, net income of $107 million and earnings per share (EPS) of $0.08. These financial results include restructuring charges of $0.13 per share. Without the charges, EPS would have been $0.21, considerably better than the company's mid-quarter expectations. TI's revenue declined 30% compared with the fourth quarter of 2007 and declined 26% compared with the third quarter of 2008. Revenue in all segments declined in both comparisons. TI's operating profit declined 95% compared with the fourth quarter of 2007 and 93% compared with the third quarter. The declines were due to lower revenue and the associated lower gross profit in all segments, higher restructuring charges, as well as the impact of underutilized manufacturing assets. These more than offset other manufacturing cost reductions and lower operating expenses. Excluding restructuring charges of $254 million, TI's operating profit was $305 million in the fourth quarter, or 12.2 percent of revenue.