US chipmaker to cut 3 percent of total workforce in spite of profitable year
US chipmaker Texas Instruments has announced plans to cut 1,100 jobs, despite recording positive financial results in Q4.
The cuts, equivalent to around 3 percent of the company’s total workforce, will affect workers in the US, Japan and India as part of a drive to save $130 million by the end of 2014. Japan will be particularly affected, with cuts to the company’s sales and customer support operations in the country as TI scales down its operations there.
The job losses come in spite of the Dallas-based company revealing that its fourth-quarter net income nearly doubled as restructuring charges fell and revenue ticked up 2 percent. Fourth-quarter results recorded revenues of $3.03 billion (£1.84 billion), net income of $511 million (£308.7 million), and earnings per share of 46 cents.
Everything’s bigger in Texas
However earnings were down slightly compared to the company’s estimates, as restructuring charges concerning the company’s Embedded Processing unit and Japanese operations totalled $49 million. This resulted in earnings being reduced by 3 cents per share, as the company had not accounted for these when issuing guidance.
“Our balance sheet remains strong,” said Rich Templeton, CEO of Texas Instruments (pictured), “Our fourth quarter capped a year in which each quarter’s performance increasingly reflected the impact of structural changes we’ve made to focus TI on Analog and Embedded Processing, where the diversity and longevity of our positions are assets”.
Overall in 2013, TI recorded revenues of $12.2 billion (£7.4 billion), down five percent on the previous year, with earnings of $1.91 cents per share, up 26 percent annually. The company also reported a 44 percent growth in operating profit in 2013, climbing to $2.8 billion (£1.69 billion).
However, TI also announced that it expects Q1 2014 to fall short of analyst expectations, predicting that its net income will be 36 cents to 44 cents a share, including restructuring costs, on sales of $2.83 billion to $3.07 billion (£1.72 billion to £1.86 billion).
The announcement means that TI is the second major chipmaker to announce employee cuts, after Intel announced it would be eliminating 5,000 jobs, around 5 per cent of its workforce, as it attempts to react to a shrinking PC market. TI is most well-known for its mathematical calculators, but also produces processors for growing markets such as in-car communication and internet infrastructure. It previously cut 1,700 jobs in November 2012 as part of its withdrawal from the smartphone processor market in the face of high competition.
“Technology markets mature from time to time and you have to rebalance where you spend your money,” Chief Financial Officer Kevin March said. “In the case of Japan, the size of the market there has been declining for a number of years.”
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