Raychem Will Cut 900 Jobs, Report a Loss

In response to a softening U.S. defense industry, Raychem Corp. said Wednesday that it would restructure, cut its work force by about 8%--about 900 jobs--and report a loss for its fiscal year ending June 30.

The Menlo Park-based material-sciences company said it will report a restructuring charge of $75 million to $90 million for the fiscal third quarter that ended March 31, resulting in a loss for the entire fiscal year.

Raychem said many of the 900 job cuts from its work force of 11,400 employees will be made by June 30.

The restructuring also includes cost cuts, manufacturing consolidations and plans to sell its Advanced Packaging Systems division, major parts of its shape memory alloy business and undeveloped land in Menlo Park, Raychem officials said.

“Slippage in our defense business is placing increased pressure on the company’s electronics sector. . . . This restructuring puts us in a position to capitalize on our strengths in a changing environment,” said Robert Saldich, Raychem’s new president and chief executive. Saldich formally took office April 1.

Raychem’s core industrial and electronics businesses have held up reasonably well, analysts say, but the weakening U.S. automotive and military industries have dented its earnings. The government is one of Raychem’s bigger customers.

Analysts also say the company’s profit has been hit by development costs at Raynet, its fiber-optics unit, although fiber-optics may be the key to Raychem’s long-term growth.