KLA-Tencor lays off 900

Following on Applied Material's 12% workforce reduction, fellow capital equipment vendor KLA-Tencor announces plans to cut 15% of its workforce by the end of June.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 11/19/2008

KLA-Tencor Corp has announced a 15% workforce reduction to be implemented by June 30, 2009.

The announcement came just days after Applied Materials Inc, a KLA-Tencor capital equipment vendor competitor, announced plans to cut 1,800 jobs or 12% of its workforce. Both companies said the current financial situation is having a negative impact on demand. 

Indeed, there has been a well-noted decline in capital equipment demand. Gartner Inc this week reported that its 2009 capital spending expectations have been reduced from $41.1 billion to $39 billion and its 2009 total equipment spending expectations have been reduced from $30.5 billion to $26.8 billion. Gartner estimated that the capital equipment industry will see a quarterly revenue bottom in mid-2009, at $6.3 billion, which is a level not seen since Q4 2003.

KLA-Tencor's job cuts are part of the company’s effort to reduce quarterly operating expense run rate to approximately $165 million to170 million by the end of its fiscal year 2009 (concluding in June).

“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,” said Rick Wallace, KLA-Tencor CEO, said in a statement Tuesday.

In connection with the layoffs, KLA-Tencor expects to record an initial charge between $15 million and $20 million, almost all of which is related to estimated severance costs. KLA-Tencor said that it anticipates additional restructuring charges, severance costs, and other related expenses in connection with the workforce reduction at least through the remainder of its fiscal year 2009 but that it is unable to estimate the amount of such additional charges at this time.