National Semi to Dismiss 2,000, 2nd Payroll Cut in Five Months
National Semiconductor, in its second big layoff in five months, said Monday that it plans to dismiss 2,000 workers, or about 5% of its work force worldwide, as part of an overhaul designed to focus attention on its semiconductor business.
The company, one of the nation’s largest makers of computer chips, said the layoffs would include 500 employees in the San Francisco Bay Area, primarily at its headquarters in Santa Clara. National said the dismissals would include managers and assembly workers in the United States, Europe and Asia.
Charles E. Sporck, National’s president and chief executive, said the dismissals were difficult to make. But, he added, “this step is necessary in order to staff our organization around the needs of our fundamental business, the semiconductor business, and to bring our costs into alignment with our current and projected revenues.”
Slowdown in Industry
Along with the layoffs, National said it will record a restructuring charge of undetermined size in the third quarter of its fiscal year. The year already has been tough for National: During the first half, which ended Nov. 27, the company reported a net loss of $55.7 million.
Some of the loss stemmed from National’s decision in August to reorganize its Information Systems Group, a computer marketing arm, and lay off about 450 people. That move--and the recent agreement to sell half of its National Advanced Systems unit, which sells mainframe computers, to Memorex Telex NV--are part of the company’s effort to focus attention on semiconductors, said spokeswoman Mary Coady.
National’s layoffs underscore a general slowdown in the semiconductor industry. Late last year, fellow chip maker Advanced Micro Devices announced plans to lay off 2,400 workers. But analysts said National’s plight reflects more than the general sluggishness in the industry.
Christopher D. Kirby, an analyst with Rothschild Inc. in New York, cited National’s mix of products. “There really are just a couple of key products that are moving well. The demand for all other products is mediocre. Because National isn’t positioned in the hot products end, they’re feeling the pinch a little more than some others,” Kirby said. For example, he said, National doesn’t make dynamic random access memory chips and has only a small presence in the static random access memory chips.
National also hasn’t had “a real strong” microprocessor, said James L. Barlage, an analyst with Smith, Barney, Harris Upham & Co. in New York. A microprocessor is the “brain” of a computer.
The areas in which National is weak, he added, had good growth in 1988 and likely will continue to in 1989. The company has a large presence in logic chips, he said, but “that’s an area that is being displaced by a number of other technologies.” Logic chips help computers process information.
National has been “significantly underperforming” since 1986 when the industry overall grew 23% and the company’s sales rose only 1%, said Michael Gumport, an analyst with Drexel Burnham Lambert in New York. The problem, Gumport said, has been poor execution of a strategy that once served the company well: producing large quantities of cheap chips.
Sporck said the company expects slow growth in 1989, “in line with industry levels.” But, he added, the company is optimistic about the long-term outlook for itself and the industry.
The company said it will provide a range of outplacement services for workers who lose their jobs in the cutbacks. Services will include severance pay, counseling and help in finding other jobs, the company said.
A CHRONOLOGY OF HIGH-TECH LAYOFFS
Nov. 16, 1987: National Semiconductor announces that it will cut 500 jobs over the next several weeks following the purchase of Fairchild Semiconductor on Oct. 8, 1987. The layoffs are a result of staff reorganizations and will affect all levels of employees.
June 28, 1988: IBM announces a $600-million consolidation plan it says will probably lead to resignation or retirement of 3,000 to 4,000 employees. The move is designed to “further reduce costs, provide for future growth and speed new products to customers.”
Aug. 14, 1988: National Semiconductor plans to restructure its Information Systems Group, with 450 employees expected to be laid off.
Oct. 2, 1988: Advanced Micro Devices, the nation’s fifth-largest computer chip maker, plans to lay off up to 1,400 manufacturing workers in Malaysia and the Philippines. The company is expecting a downturn in third-quarter earnings.
Nov. 11, 1988: Advanced Micro Devices announces plans to lay off 1,000 U.S. workers at its Sunnyvale, Calif., headquarters and at satellite manufacturing plants in Santa Clara, Calif., San Antonio and Houston. “We are taking immediate action to reduce costs to a level appropriate for anticipated sales levels,” says Chairman W. J. Sanders.
Dec. 2, 1988: Seagate Technology, one of the world’s largest makers of hard disk drives, says 1,000 employees will be laid off in response to overproduction throughout the industry. Seagate took on about $287 million in debt in 1987 to finance expanded production in expectation of increased demand for its products for use in personal computers.
Dec. 16, 1988: MiniScribe announces that it will lay off about 2,000 people over the next four to five months. MiniScribe Chairman Q. T. Wiles says the reduction is necessary because of lagging sales and overproduction.
Dec. 28, 1988: Prime Computer of Natick, Mass., announces a sweeping reorganization and cost-cutting program that will eliminate 1,200 jobs. Prime officials contend the job cuts are not directly related to an unsuccessful hostile takeover bid by MAI Basic Four in Tustin, although several industry analysts question that claim.
Jan. 8, 1989: Honeywell Bull says it plans to cut its U.S. work force by 1,600 employees in the next two months to make itself more competitive in the industry. The majority of the cuts will affect manufacturing and administrative functions.
Jan. 16, 1989: National Semiconductor says it will lay off about 2,000 workers in a move to focus emphasis on semiconductor production. The company has been hurt by its reliance on the sluggish PC market.
