Lam Research announces 1,300 layoffs, 7% of workforce, as outlook looks bleak

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Lam Research Corp. shares declined in the extended session Wednesday after the silicon-foundry equipment supplier forecast results for the current quarter that fell well below the Wall Street consensus, while announcing it would reduce its workforce by 7%.

Lam Research 
LRCX,
+0.18%

shares declined 3% after hours, following a 0.2% decline to close the regular session at $488.40.

The Fremont, Calif., company said it plans to reduce its workforce by 1,300 employees by the end of March.

It expects fiscal third-quarter adjusted earnings of $5.75 to $7.25 a share on sales of $3.5 billion to $4.1 billion, while analysts surveyed by FactSet, on average, are projecting earnings of $7.78 a share on revenue of $4.35 billion.

“Lam closed out 2022 with record revenue and earnings per share for both the December quarter and calendar year, despite supply-chain challenges and inflationary pressures,” said Tim Archer, Lam’s chief executive, in a statement. “Given the decline in wafer-fabrication equipment spending expected in calendar year 2023, we are taking proactive steps to lower our cost structure and drive efficiencies across our global footprint, while preserving critical R&D.”

Read: Google U.S. layoffs affect nearly 3,000 employees on both coasts, from data scientists to massage therapists

“With these actions, Lam is focused on accelerating our strategic priorities to capitalize on the semiconductor industry’s long-term growth prospects,” Archer said. On Tuesday, Texas Instruments Inc.
TXN,
-1.13%

announced it would forge ahead in building out its own capacity at a time when many others are cutting back amid a chip downturn.

Read: As Texas Instruments builds out during downturn, analysts await details on capital spending

Lam reported fiscal second-quarter net income of $1.47 billion, or $10.77 a share, compared with $1.19 billion, or $8.44 a share, in the year-ago period. Adjusted earnings, which exclude amortization and other items, were $10.71 a share, compared with $8.53 a share in the year-ago quarter.

Lam makes the very complicated machinery used by foundries like Taiwan Semiconductor Manufacturing Co.
TSM,
-2.27%

to make the silicon for chips made by the likes of Nvidia Corp.
NVDA,
+0.30%

and Apple Inc.
AAPL,
-0.47%
,
while chip makers like Intel Corp.
INTC,
-0.74%

forge their own silicon.

Revenue rose to $5.28 billion from $4.23 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast adjusted earnings of $10.03 a share on revenue of $5.1 billion, based on Lam’s forecast of $9.25 to $10.75 a share on sales of $4.8 billion to $5.4 billion.

Lam Research shares have fallen 17% over the past 12 months, compared with a 13% drop in the PHLX Semiconductor Index 
SOX,
+0.18%
,
  an 8% decline by the S&P 500 index
SPX,
-0.02%
,
and a 16.5% fall by the tech-heavy Nasdaq Composite Index
COMP,
-0.18%
.



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