|
 |
|
|
|
Applied restructured EES business to focus on LED
|
Thursday, July 22, 2010
Applied Materials Inc will restructure its EES (energy and environmental solutions) business, planning to put a greater focus on opportunities in crystalline silicon (c-Si) solar and LEDs while discontinuing sales to new customers of its turnkey SunFab lines for manufacturing thin-film solar panels.
The restructuring is expected to impact 400 to 500 Applied jobs globally and to lower the company's annual operating expenses by at least $100 million. The plan is expected to make EES a profitable segment in Applied's fiscal 2011.
The restructuring was not entirely unexpected. Applied noted in its fiscal Q2 earnings call on May 19, that it was reviewing its EES business and aiming for its profitability in fiscal 2011. In the company's fiscal Q2, ended May 2, EES reported new orders of $378 million. Net sales were $166 million, down 48% sequentially, primarily due to lower thin-film revenue. EES had an operating loss of $145 million, which included an $83 million inventory charge related to thin-film solar manufacturing equipment.
As Applied discontinues sales to new SunFab customers, it will offer individual tools for sale to thin-film solar manufacturers, including CVD (chemical vapor deposition) and PVD (physical vapor deposition) equipment. R&D efforts to improve thin-film panel efficiency and high-productivity deposition will continue, Applied said. The company will support existing SunFab customers with services, upgrades, and capacity increases through its Applied global services segment. Applied's solar R&D center in Xi'an, China, will concentrate on its c-Si solar and other technologies.
Mark Pinto, Applied's executive VP of EES and display corporate technology officer, will remain at EES' helm.
"While Applied has delivered significant innovations with our SunFab production line and made substantial progress on our technology roadmap, the thin-film market has been negatively impacted by several factors, including delays in utility-scale solar adoption, solar panel manufacturers' challenges in obtaining affordable capital, changes and uncertainty in government renewable energy policies, and competitive pressure from crystalline silicon technologies," said Mike Splinter, chairman and CEO of Applied Materials, in a statement. "Led by Mark Pinto, EES will focus on our industry-leading crystalline silicon solar business and on pursuing other opportunities in advanced energy technologies like LED lighting."
Applied also plans to divest its low-emissivity architectural glass coating products, while continuing development activities in emerging technologies such as "smart" electrochromic glass.
The restructuring will not come cheap. The cost of implementing the EES plan is expected to be in the range of approximately $375 million to $425 million, or $0.18 to $0.21 per share, which will be reported in the company's fiscal Q3 report, slated to be released on August 18. Applied anticipates that it will record inventory charges of up to $240 million; equipment and intangible assets impairment charges of up to $95 million; employee severance of up to $50 million; and other obligations of up to $40 million.
Applied said that a number of 400 to 500 affected employees may transfer to other groups or functions within the company. Splinter in a company blog post this morning said that Applied will shift "as many employees as possible to open positions" and noted shifting a "significant number" from EES to Applied global services unit to provide support for the company's existing SunFab customers and architectural glass customers.
With the restructuring plan announced, Applied restated its fiscal Q3 EPS (earnings per share) estimates today. In the company's fiscal Q2 report, EPS had been estimated at between $0.22 and $0.26 per share. That was revised to earnings of $0.10 to $0.14 per share on the restructuring.
By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved
|
|
|
|
