Texas Instruments Inc., which makes chips for cell phones and other gadgets, said Monday it will cut 3,400 jobs because demand has slackened amid a slowing economy.
The chip maker will shed 12 percent of its work force by the end of September — 1,800 jobs through layoffs and another 1,600 jobs through voluntary retirements and departures. It expects annual savings of $700 million when combined with another round of cuts announced in October to eliminate 650 jobs.
“We are realigning our expenses with a global economy that continues to weaken,” said Rich Templeton, chairman and chief executive. “By reducing expenses now, we keep TI financially strong and able to invest for future growth.”
The announcement came as the Dallas-based chip maker reported sharp declines in fourth-quarter profit and revenue.
The company earned $107 million, or 8 cents per share, down 86 percent from $756 million, or 54 cents per share, during the same period of 2007. TI predicted last month that it would earn 10 cents to 16 cents per share.
The latest period includes restructuring charges of $254 million, or 13 cents a share. Excluding those charges, TI earned 21 cents a share, higher than 12 cents per share forecast by analysts polled by Thomson Reuters.
Revenue plunged 30 percent to $2.49 billion from $3.56 billion in 2007 but topped the Wall Street forecast of $2.37 billion. Last month, TI predicted revenue between $2.3 billion and $2.5 billion.
For the first quarter, TI estimated its results would range from a loss of 11 cents per share to a profit of 3 cents per share. The estimate includes a restructuring charge of 3 cents per share. Analysts polled by Thomson Reuters expected a profit of 3 cents per share.
The company said it expects first-quarter revenue between $1.62 billion and $2.12 billion in the first quarter, compared to the average analyst estimate of $2.1 billion.
Ron Slaymaker, vice president of investor relations, said TI was preparing for a long economic slide. Previous slowdowns were addressed by reducing inventory over three quarters, but this one is different.
“It is a broad economic slowdown in which consumer consumption has dramatically weakened and likely will weaken further,” he told analysts on a conference call. “We are planning for a weaker economic environment that could be around for a while.”
The latest round of job cuts will span TI’s worldwide operations, Slaymaker said in an interview. Most will take effect by the end of March.
The company employed about 29,500 people at the end of last year, including 11,700 in Texas. It had 3,100 employees throughout Europe and 2,300 in Japan.
The cuts will result in charges of about $300 million.
In 2008, TI earned $1.92 billion, or $1.45 per share, compared with $2.66 billion, or $1.84 per share, in 2007. Revenue slid 9.6 percent to $12.5 billion from $13.84 billion.
TI said it abandoned efforts announced in October to sell part of a unit that makes chips for cell phones. Kevin March, chief financial officer, told analysts it was “more financially worthwhile” to keep the business.
The results were released after markets closed. During regular trading, the shares fell 22 cents to $14.77. In aftermarket activity, they climbed 73 cents, or 4.9 percent, to $15.50.
The chip industry is suffering a sharp drop in demand. Intel Corp. said last week that it would cut up to 6,000 manufacturing jobs as it struggles with souring demand for personal computers.