UPDATE 2-Chip gear maker Applied Materials to cut jobs

Wed Oct 3, 2012 6:39pm EDT

* Cuts expected to save at least $140 million

* Expected to focus on core chip equipment business

* Stock stable after hours

By Noel Randewich and Chandni Doulatramani

Oct 3 (Reuters) - Applied Materials Inc said it would cut its workforce by 6 to 9 percent to reduce costs as it struggles with a slowdown in its chip manufacturing equipment business and troubles at its solar and display groups.

The Santa Clara, California, company is implementing a voluntary retirement program and other measures to eliminate between 900 and 1,300 positions, it said in a statement on Wednesday.

Hurt by slow economies, tepid PC shipments and declining sales in its non-core display and solar businesses, Applied Materials warned in August that its revenue would fall more than expected.

The company has assigned Gary Dickerson, recently appointed president of Applied Materials, to review the effectiveness of its investments in its different businesses.

That could lead Applied Materials to get out of its non-core markets to focus on developing more competitive chip manufacturing gear, some analysts said.

"This is a strong indicator that Gary Dickerson is starting to exert his influence in the company," said Stifel Nicolaus analyst Patrick Ho. "I think this is the initial move. I don't think this is then the only move."

By the time the cuts are implemented in the third quarter of fiscal 2013, they should save between $140 million and $190 million annually, Applied Materials said.

The company expects to record a pre-tax restructuring charge of between $180 million and $230 million. It will begin recording the charges in the fourth quarter of fiscal 2012, with the remainder during fiscal 2013.

Dickerson was previously Chief Executive of Varian Semiconductor Equipment Associates, which Applied Materials bought in 2011.

Wafer fabrication equipment supplier Lam Research, which this year bought Novellus Systems for $3.3 billion, could also reduce its workforce, said Caris & Co analyst Ben Pang.

Applied Materials' stock was unchanged in after hours trading after closing down 0.09 percent at $11.16.

Shares of LAM Research were up 0.22 percent in extended trade after closing 1.09 percent lower at $31.75.

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