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Applied Materials Restructuring Solar Business

In order to meet its recently announced goal to reduce the annual revenue breakeven level in its Energy and Environment Solutions (EES) segment from $800 million to $500 million in FY 2013, Applied Materials yesterday said it would be laying off approximately 250 people and moving its precision wafering system (PWS) solar business from Cheseaux, Switzerland to Asia. The EES segment includes Applied Material's solar and LED business units.

The company said in a report to investors that PWS business operations and customer support functions will be relocated primarily to Treviso, Italy, the headquarters for Applied's Baccini Cell Systems, and Xi'an, China, the site of Applied's Solar Technology Center. PWS's headquarters and new product development will remain in Switzerland. The restructuring will also include significant reductions in development activities for LED.

Applied Materials estimates the total pre-tax cost of implementing the plan to be in the range of $70 to $100 million, or $0.04 to $0.06 per share, which will be incurred over the next 12 to 18 months beginning in the third quarter of fiscal 2012. Part of this estimate consists of up to $40 million in severance and other employee-related costs.

So far, more than fifteen other companies in the solar space, including Sunpower and First Solar, have announced bankruptcies, scaling back or restructuring of their operations in the past 12 months. Solar manufacturing companies are suffering due to low panel prices and reduced government incentives for solar power in what were once key global markets.

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