Mattson laying off 5% of workers, spares new product R&D

June 26, 2008 – Citing pressures from a continued memory sector slump, Mattson Technology says it is laying off 5% of its workforce (~25 employees) by the end of the next fiscal quarter, in an effort to reduce costs in certain areas while sparing new product investments and other initiatives.

“Memory spending is highly cyclical and has been exacerbated by the overall weak global economy,” noted president/CEO David Dutton, in a statement.

The layoff targets reducing cost structures in “selected organizations” (though no details on what or where those areas are), while “allowing the company to continue critical investments in our new products and strategic initiatives,” Dutton said.

Mattson said it expects the plan will result in one-time pre-tax charges of ~$0.7M, including severance pay, to be recorded in 2Q08 (and impact 2Q08 operating results). But ultimately the workforce reduction is expected to save ~$1.9M/year, which will be plowed back into new product development. Operating expenses are expected to be maintained at current levels.

In a phone interview with WaferNEWS, Mattson CFO Andrew Morning noted that the layoff is an attempt to “take costs out of the support side of the business” — “support” meaning backend functions such as finance, admin, etc., not product support — “so we can continue to invest in R&D and introduce new products.”

The key to the workforce reduction was to keep product development intact. “We’re not going to jeopardize our new product strategy,” Morning said. Asked how the 5% number was arrived at, he noted that there “there was no magical number” decided upon, but the company simply decided it had to make the decision, “and our individual organizations responded.”

Asked for more specifics about the distribution of the layoffs, he indicated they’d be “close to 60%/40%” in the US vs. the rest of the world, with foreign impact mainly in backoffice functions in regional offices. About five of the 25 affected positions will be in manufacturing, primarily in the US.


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