Semiconductor equipment manufacturer Applied Materials Inc has announced it will take a $285m, or $0.56 per share, in its fourth quarter as a result of restructuring activities throughout the year. The Santa Clara, California based company said $50m of the charges consisted of severance payments to its 2000 recently laid-off staff (CI No 3,482); $50m for consolidation of facilities and one-time charge of $70m for asset write-downs. In addition, Applied said it has reserved $65m for a doubtful receivable obtained in connection with the settlement of patent litigation with ASM International. When fully effective, starting in the first fiscal quarter of 1999, Applied said these restructuring actions are expected to reduce the company’s cost structure by approximately $40m per quarter. The company also said it will incur an after-tax charge of approximately $50m in connection with discontinuance of operations of Applied Komatsu Technology (AKT), a 50-50 joint venture with Komatsu in Japan, which supplies equipment for flat-panel display production. Applied said the charge consists primarily of employee severance and benefit costs relating to the cuts. As previously announced, AKT will now focus on chemical vapor deposition systems for the flat panel display market, discontinuing sales of two other types of (PVD and Etch) systems. AKT blames Asia’s economic downturn, slower-than-expected adoption of flat panel display technology and the overall slowdown of the growth of the PC market for the cutbacks. Applied Materials will report results for the quarter and year on October 25. Analysts surveyed by First Call are expecting net income of $0.02 per share before the effects of one-time charges.
