Watkins-Johnson sales dip nips Semi Equip staff

Electronic News, Feb 2, 1998 by Dylan McGrath

Scotts Valley, Calif.--Watkins-Johnson Co. is expected to lay off dozens of employees at its Semiconductor Equipment group here in the coming weeks. The reason for the layoffs is apparently a downturn in business. Last week, Watkins-Johnson reported a 32 percent decline in equipment sales during its most recent quarter.

A spokesman for Watkins-Johnson said it has been announced within the company that cutbacks will be made in the Semiconductor Equipment group. He said the number of people to be laid off and the time frame of when they will be let go are not yet known. According to the spokesman, those decisions will be made within the next couple of weeks. But a source close to Watkins-Johnson said a company-wide E-mail has already been sent out which indicates Watkins-Johnson will let go of 100 employees.

The main factor causing the downturn in Watkins-Johnson's Semiconductor Equipment group business and the need for the layoffs is the Asian financial crisis (AFC), said the spokesman. With several key Korean customers, including Anam Semiconductor, the AFC has hit Watkins-Johnson particularly hard. "We were looking at a pretty good year," the spokesman said, "until the problem with the Asian market arose."

Watkins-Johnson's year-end financial statement, released last week, indicates the company will take a first-quarter charge for severance pay. Sales of semiconductor equipment were down 32 percent in 1997, to $186 million from 1996's $272 million.

In September 1997, Watkins-Johnson divested itself of its longtime staple business, defense electronics and microwave components and subsystems. These portions of the company were sold to TSMD Corp., a subsidiary of Mentmore Holdings Corp., for about $100 million (EN, Sept. 22, 1997).