Solectron Says It Plans to Lay Off 12,000 Employees
Solectron Corp., a Silicon Valley-based manufacturer of electronics equipment, said Thursday that it would lay off 12,000 people, about 16% of its workforce.
The company said it didn’t know where the jobs would be lost. Solectron is based in Milpitas and has operations in Cypress, but its factories are spread throughout the Americas, Europe and Asia.
Spokeswoman Birgit Johnston said the cutbacks would happen over the next several quarters. “We’ll tell our employees first,” she said.
Solectron already has cut more than a third of its staff, dropping from 114,000 employees three years ago to the current total of 74,000.
The company, which makes computers and other electronics equipment for such brand-name companies as Cisco Systems Inc. and Hewlett-Packard Co., also forecast a loss for its fiscal third quarter, the ninth in a row.
“I am not pleased to deliver this guidance, but it is where we are today,” Chief Executive Michael Cannon said on a conference call. “There is more work to be done.”
Cannon, who joined the company in January, said competition for new business was intense.
The layoff announcement came against a backdrop of continued retrenchment by tech companies, which have shed an estimated half a million jobs since the boom peaked in 2000.
Applied Materials Inc., a Silicon Valley manufacturer of semiconductor equipment, said Monday that it would pink-slip 14% of its workforce. Computer manufacturer Gateway Inc. announced the same day it was firing 17% of its employees. Agilent Technologies Inc., a measurement equipment company based in Palo Alto, said last month that it would shed 11% of its workers.
Michelle Lin Gutierrez, an analyst with SoundView Technology, said that during the late-1990s boom, Solectron “went on an acquisition spree. Even with the new cuts, they’ll have a sizable number of people in a bad economy. Their factories are operating at about 30% to 40% of practical capacity.”
On the positive side, Guiterrez said, “they’re recognizing reality and acting more appropriately.”
Solectron said Thursday that its fiscal second-quarter revenue was $2.8 billion, down from $3 billion in the same period last year.
The net loss was $111 million, or 13 cents a share, compared with a loss of $126 million, or 15 cents, a year earlier.
The 2003 loss included a pretax restructuring charge of $57 million. Solectron said it intended to take an additional $300 million in restructuring charges to consolidate operations and reduce the workforce in North America and Europe.
Spokeswoman Johnston said the company couldn’t provide employee counts by region. In financial documents, however, Solectron said 69% of its 15,000 most recent layoffs were in the Americas region, 20% were in Europe and 11% were in the Asia-Pacific region.
The company released its earnings after the markets closed. Its shares ended the day at $3.41, down 7 cents, on the New York Stock Exchange.
