Teradyne Cuts Jobs

With its stock already off 20% for the year and sorely lagging its chip-equipment peers, Teradyne(TER Quote) said Tuesday it will cut 7% of its work force.

The 400 job cuts are part of "the company's ongoing effort to lower expenses," Teradyne disclosed in a filing with the Securities and Exchange Commission.

Teradyne's stock ended the regular session Tuesday up 2.1% to $13.70.

The job cuts at Teradyne, which makes testing equipment used in semiconductor manufacturing, coincide with the semiconductor-equipment industry's largest trade show, Semicon West, held this week in San Francisco. Most of the executive presentations during the show's opening echoed the rough start to the year, but most expressed a cautious optimism.

Still, a sharp snapback in demand doesn't seem to be part of the equation as Teradyne's latest announcement illustrates. Other tool companies have also taken cautious approaches to staffing for the remainder of the year.

Teradyne had 6,200 workers at the end of 2004; it then moved to cut 320 workers early in January. Business has dropped off substantially this year as semiconductor customers have ratcheted back on expansions amid lackluster growth.

Teradyne also makes testing equipment used on circuit boards, automotive electronic systems and broadband networks. All of the cuts announced Tuesday were made in the semiconductor test division.

The reduction will be completed this year and will result in cash severance charges of $12.7 million for the third quarter and $4 million in the fourth quarter.

Teradyne will report second-quarter financial results on July 19. Analysts currently expect a loss of 21 cents a share on sales of $308 million, on average, according to Thomson First Call.