ON Semi Cuts Jobs, Lowers Outlook
PHOENIX, Jan. 8, 2009 -- ON Semiconductor Corp. said it will cut 1500 jobs, speed up factory closures, initiate a hiring freeze and take other cost-cutting measures as worldwide demand for its chips continues its downward slide. The company also lowered its outlook for the fourth quarter of 2008.
ON supplies data and power-management chips to the automotive, communications, computer, consumer, medical, industrial, cell phone and military/aerospace markets. The company said it will cut 10 percent of its staff, move up factory closings from the end of 2009 to midyear and begin four- to six-week shutdowns at other factories. ON also will institute pay cuts for senior executives and eliminate bonuses and merit pay increases. These and other measures are expected to reduce fixed costs by $40 million to $50 million a quarter. Restructuring and other costs are expected to total $20 million to $30 million over the next five quarters.
The company also announced that it is revising the fourth-quarter 2008 outlook it provided Oct. 30. It had said that it expected fourth-quarter 2008 revenues to be approximately $500 million to $550 million, or down about 5 to 14 percent sequentially from the third quarter of 2008.
ON now says it expects revenues for the quarter to be down approximately 16 percent, to around $480 million. The company will provide full details on the fourth quarter and on 2008 annual results during the first week of February.
“Our updated fourth-quarter 2008 revenue outlook reflects the reduction in demand we have experienced as a result of deteriorating conditions in the global economy,” said Keith Jackson, ON Semiconductor president and CEO.
He added that the company expects the first quarter of 2009 to be equally challenging. “While we are hopeful that the economy will improve as we move through 2009, we have and will continue to examine our overall spending and are prepared to take additional actions to ensure we remain competitive and are positioned to generate positive free cash flow in this challenging environment,” Jackson said.
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