Teradyne lays off 14% of staff, implements 10% pay cut

Teradyne's CEO claims the ATE supplier's expansion plans are on schedule and continues to expect market share gains, despite reporting a weak Q4 and cost-cutting actions.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 1/29/2009

Teradyne Inc will cut approximately 14% of its staff and implement a 10% broad-based temporary pay cut in an effort to reduce expenses by approximately $140 million a year.

The announcement came today as the ATE (automatic test equipment) supplier announced Q4 2008 revenue of just less than $195 million, more than $100 million below Q3 sales of $297 million and some $65 million below Q4 2007 sales of $260 million.

Teradyne also reported Q4 net loss of more than $55 million, compared to the company's Q3 loss of $22.7 million and Q4 2007 profit of $16.7 million.

For full-year 2008, Teradyne reported sales of $1.1 billion, near flat with 2007 results. Net loss of $64.5 million, however, was a significant decline from 2007 profit of more than $77.7 million. Bookings for the year were $996 million, compared to $1.1 billion in 2007.

“In 2008, we brought a record number of new products to market, gained market share for the third year in a row, and significantly reduced our operating costs,” said Mike Bradley, Teradyne president and CEO, in a statement. “But worldwide economic conditions require that we reduce our fixed costs even further. We remain focused on our new product development and customer support priorities as we navigate through these very challenging times."

Teradyne's Q1 guidance calls for sales of $125 million to $145 million, with continuing losses. The test company will apply its 10% pay cut and 14% headcount reduction in the current quarter. According to Teradyne's Web site, the company 3,600 people worldwide.

Teradyne did not state what types of positions would be cut or from what locations. The company also did not estimate when it would end the temporary pay cut action.

Looking to 2009, Bradley optimistically said, "Our market expansion plans are on schedule, costs are being lowered significantly, and we expect to continue our multi-year track record of gaining share in our core businesses."

The CEO noted that Teradyne is on schedule to compete in the high-speed memory test market in 2009 with its offerings in next-generation DRAM products. That follow's on Teradyne 2008 flash market entrance, post its Nextest Systems acquisition.

Last year also saw Teradyne announce plans to acquire Eagle Test and its franchise in power management and other analog-dominant IC test applications. When the buy was announced in September, Bradley was confident that Eagle Test's products would complement Teradyne's SOC test solutions provided by its FLEX and J750 test systems. He also said at the time that Teradyne would put "the full weight" of its distribution organization behind Eagle Test's product line.

"Our most recent acquisition, Eagle Test, while facing tough market headwinds, provides us with a very strong analog system-on-a-chip platform," Bradley said today. "Couple this with our distribution and support muscle in Asia, and we’re well positioned to accelerate Eagle Test’s growth."