Agere Adjusts For Soft Demand

Facing soft demand from major customers, semiconductor and software specialist Agere Systems said it will lay off 500 people and close three facilities to cut costs.

The cuts represent approximately 7 percent of the workforce and include administrative, sales, marketing and product development. Offices in Maine, New Jersey and the Netherlands will be shut.

In addition, Agere said it would close its wafer manufacturing facility in Orlando, Fla., by the end of 2005 if a buyer can’t be found for it. The
factory has been on the market since 2002 and employs 600 people.

The company’s products are used in a range of products including mobile
phones, PCs, PDAs, hard disk drives, gaming devices, satellite radios and
wireless and wireline networks.

“I’m confident that the improved cost structure, coupled with sharply
focused R&D investments, will drive profitable growth as we move to 2005,”
John Dickson, Agere’s president and CEO, said on a conference call with
analysts.

Agere and other chipmakers such as Intel have said that an
inventory glut has hurt demand from electronics manufacturers.

Dixon said the company would also re-focus its R&D on growth areas such as
VoIP , storage, mobile phones and network access solutions.

The job cuts will result in a restructuring charge between $340 million and
$360 million, spread over several quarters.

Agere, which spun off from Lucent in 2000, affirmed that
revenues in the September quarter will be between $420 million to $445
million. However, revenues for the December quarter will likely be 5 percent
lower sequentially because of seasonal demand and inventory concerns, the
company said.

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