SAN FRANCISCO -- Marvell Technology ( MRVL) knows a bad economy when it sees one.

Amid a fourth-quarter earnings report that showed a revenue decline of 39% from a year ago, the chipmaker said it will slash its workforce by 15% to combat the "deteriorating economic environment."

The job cuts, affecting about 850 workers through the rest of 2009, come in combination with certain cost-savings measures started in the fourth quarter.

Marvell estimates restructuring charges of about $20 million associated with the layoffs and facility consolidation taken so far, including about $14 million related to severance and other employee benefit payments.

But the company anticipates further charges as it continues to implement its cutbacks.

Investors seemed initially on board with the plan, bidding the stock 3.3% higher in recent after-hours trading to $7.77.

The moves are hardly alarmist: Marvell swung to a loss of $65 million, or 11 cents a share, as revenue plunged to $512.9 million from $791 million a year earlier.

Analysts were on guard for the revenue numbers -- the company had warned in late January that its top line was to take a severe hit in the fourth quarter.

As has been seen with most chip companies, the dropoff in demand during the fourth quarter was nothing short of astonishing. In the third quarter, Marvell had posted revenue growth of 4%.

Excluding items, Marvell posted break-even earnings per share, just under Wall Street's consensus estimate of a penny a share. In addition, Marvell managed to keep its operating margin at 18.6%, even with its third quarter.

"The results for our fourth quarter reflect the challenging business environment our company, and the world, currently faces," said Sehat Sutardja, Marvell's chairman and CEO. "Notwithstanding the challenges we encountered during our fourth quarter, we were able to sustain gross margins, act quickly to lower our operating expenses and generate a healthy free cash flow. However, we believe the current economic climate will not substantially improve over the short term."