Cypress warns of losses for rest of 2001

Cypress warns of losses for rest of 2001 News from E-InSite
San Jose-based Cypress Semiconductor Corp. today said it would axe 650 jobs in responseto falling profits.
Cypress (nyse: CY) posted a net income for the second quarter of $787,400, or 1 centdiluted earnings before goodwill (EBG) per share. This compares to 25 cents EBG per sharein the first quarter and 54 cents EBG per share for the second quarter last year. Analystsexpected the company to report a loss of 1 cent per share.

Revenue for the quarter, ended July 1, was $185.5 million, down 29 percent from firstquarter revenue of $262.3 million and down 38 percent from the year-ago quarter's$300.8 million in revenue. The company achieved record revenue of $370 million just sixmonths ago, for its fourth quarter 2000.
Shares in the company were trading at $23.3 during the early afternoon, up 7.8 percent.
"Our company's quarterly revenue has effectively been cut in half in sixmonths, illustrating just how steep this downturn has been," said T.J. Rodgers,Cypress' chief executive officer, in a statement. "We are proud to have enduredthis precipitous decline in revenue without losing money."

Rodgers said the company plans to take a restructuring charge of $140 million to $180million in the third quarter, primarily to write down excess manufacturing equipment. Thisalso includes 500 of the lay-offs. The further 150 come from a 10 percent across-the-boardreduction in non-manufacturing functions of the company.
"We've profitably survived the steepest two-quarter sequential drop in salesin our history," Rodgers said. "We're looking at a flat third quarter,which could well be the bottom quarter of this recession, unless we've already seen thebottom. The third quarter is therefore forecasted to be up in bookings and billings, butthe bottom quarter for profit."
The absence of a sizable short-term recovery in the datacom segment, along withpressure on average selling prices, will cause Cypress to be unprofitable for theremainder of the year, Rodgers said.
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