Chartered slashes Q4 expectations
With weaker market conditions, foundry now expects net loss of US$76m to US$84m
The company will be releasing its fourth-quarter results on Jan 30 next year. Its shares closed half a cent lower at 18.5 Singapore cents yesterday.
For its last quarter, Chartered posted a net loss of US$24.4 million and revenue of US$463.7 million. Taking into account SMP's contribution, Q3 revenue was US$487.2 million.
CEO Chia Song Hwee said then that this salary-trimming exercise, together with other expected payroll reductions, would help Chartered save between US$25 million and US$30 million on an annual basis.
Chartered said in October, following its third-quarter earnings results announcement, that it would undertake a 5-20 per cent temporary salary reduction for its employees - a company-wide exercise that would include senior management.
By ONG BOON KIAT
CHARTERED Semiconductor Manufacturing's fourth quarter is shaping up to be worse than it earlier anticipated.
The Singapore foundry released its customary mid-quarter update yesterday, announcing that it expects to suffer a net loss of between US$76 million and US$84 million for Q4.
In its initial Q4 guidance at the end of October, it estimated a net loss of between US$52 million and US$62 million.
Chartered's fourth quarter will end on Dec 31.
Also expected to further plummet is revenue. The company now expects revenue of between US$343 million and US$353 million for Q4, compared with the earlier estimate of between US$362 million and US$374 million.
Including its share of the minority-owned joint-venture fab SMP, the revised Q4 revenue estimate is between US$350 million and US$360 million.
The earlier estimate was between US$372 million and US$386 million.
'As the quarter is progressing, we are seeing some of our customers postponing their deliveries due to what we believe are weaker market conditions and their intent to keep inventories low,' George Thomas, senior vice-president and CFO of Chartered, said in a statement.
'We are therefore revising our outlook for the fourth quarter. Due to the uncertain business environment that continues to cloud our business visibility, we are aggressively identifying additional areas for cost reduction in addition to those that are being implemented currently.'
Chartered should be applauded for making efforts to retain its employees and get all to reduce their salaries.
Some colleagues and ex-colleagues of mine have been retrenched in recent months in the financial services sector. These companies prefers to sacrifice a few lambs to save the rest. They would target the older workers whose salaries are high and their job functions can performed by younger colleagues whose salaries are much lower.
These older workers can be hard-working and efficient task oriented managers. Their high salaries make them ideal targets for retrenchment unless their skill sets are not easily replaceable. If we lay-off a manager who earns $15K a month, many junior colleagues need not suffer any pay-cuts especially when their salaries are not that high.
I know some older managers who make themselves indispensable and refused to teach his younger colleagues to ensure his survival. For some, the strategy works until the management decides to promote him and transfer him another department for the slaughter.
In the new department, he finds difficulties acquiring new skills and unable to adapt fast enough. Bosses decide to fail his appraisals and offers him a retrenchment package unless he can find other departments to accept his high salary costs.