ARM cuts jobs as sales tumble
ARM is to cut 10 per cent of its workforce as it reports its first-ever fall in quarterly sales.
For the third quarter ending 30 September, the semiconductor designer reported revenues of £33.3m, a drop from the £37.5m reported for the same quarter last year. The company also reported net income of £5.9m, a fall from the £8.8m is raked in during the same quarter in the year before. Earnings per share were £0.06, down from the £.09 per share reported to the end of September 2001.
ARM's weaker results and the state of the industry are the reason that the company announced that it was to cut its workforce by 10 per cent. "We believe that this level is more appropriate given the current industry outlook," ARM said. The business also said that the layoffs would result in a once-off charge of £2m in the fourth quarter and are expected to save the company £5m per annum. Once completed, the redundancies will bring ARM's headcount from around 800 workers to 720 workers, the same level that employee numbers stood 12 months ago.
Warren East, ARM's chief executive, said that by adjusting its cost base to the downturn ARM would be better positioned to benefit from a recovery in the market.
ARM, which announced two weeks ago that it had sold only eight licences in the third-quarter compared to 27 in the second, has suffered from the recession in the semiconductor industry, which has put pressure on its customers to slash their costs in the face of weak demand.
The group, the world's leading semiconductor intellectual property licensee, said its long term indicators remained strong and it had no evidence it was losing market share to competitors. Nonetheless, ARM said it took a "cautious" view of the short to medium term sales outlook, and said it expected fourth-quarter sales to be flat.
Shares in ARM fell almost 12 per cent to £0.41 in early morning trade in London.