For Whom The Bellwether Tolls: Cymer Enacts More Cuts
In a grim portent for the semiconductor sector, San Diego’s Cymer (NASDAQ: CYMI) says its fourth-quarter revenue will be about $100 million—at the low end of its guidance—and additional cutbacks will be necessary.
Cymer makes specialized and extremely precise “deep ultraviolet” laser systems that are used as light sources in the photolithographic process in which semiconductor circuitry is printed on silicon wafers. Each unit typically cost about $1.25 million, and the company has more than 70 percent market share of such systems worldwide. That makes the San Diego-based company a bellwether for the global semiconductor industry.
Cymer plans to make a number of cutbacks, including the elimination of 100 employees from its worldwide roster, or about 10 percent of its workforce. This latest round comes after it laid off 85 people in November. The company says the reductions are necessitated by a continuing deterioration in the industry. The Xconomy San Diego layoff tracker has been updated here.
“Based on the limited visibility that exists, the company currently anticipates that its first quarter 2009 revenue could decrease 30 to 35 percent compared to revenue for the fourth quarter 2008,” Cymer said today in a statement.
In addition to reducing its headcount to 900 employees, Cymer says it is enacting other cost-cutting measures, including:
—A temporary 10 percent cut in employee base pay.
—Suspending the company’s 401(k) matching program.
—Suspending annual merit increases and bonuses
—Significant cutbacks in non-essential operating and capital expenditures.
That’s a lot of pain for the industry leader in the high-tech laser business. Cymer said the cutbacks, which are expected to cost about $4.5 million to enact, are intended to lower its “global cost structure” by $50 million to $55 million a year.