Weak dollar drives Rehovot HiTech company to cut staff by 6%

Semiconductor metrology specialist Nova Measuring Instruments Ltd. (Rehovot, Israel) has confirmed that it is laying off 6 percent of its 288 employees. The company's chief financial officer Dror David was cited in the Israel newspaper Globes as saying the step is mostly due to the low exchange rate of the dollar against the New Israeli Shekel (NIS). He added that the cost of the cuts will be taken in the company's results for the third quarter of 2008.

Nova is traded on the Nasdaq and the Tel Aviv Stock Exchange. Its revenues in 2007 totaled $58.1 million on which it made a net loss of $3.9 million.

Almost all the company's sales are made in U.S. dollars, while much of its costs, including salaries, are incurred in New Israeli Shekels (NIS). During 2007, the U.S. dollar devalued against the NIS by 9 percent. During the first two months of 2008, the dollar has devalued by a further 5.9 percent against the NIS. The devaluation had a negative impact on the company's operating expenses outside the U.S. in 2007, and Nova has said it is concerned that it might have a negative impact on its expenses in 2008.

The job cuts are expected across the board in Nova, and it is expected that half of the job cuts will be in Israel, where the company employs 181 workers. Nova serves all sectors of the IC manufacturing industry including logic, ASIC, foundries and memory manufactures. The company's customers are located in Japan, Korea, Singapore, Taiwan, the U.S. and Europe. Asia Pacific accounted for 55 percent of Nova's revenues in 2007.

Nova's main revenue generator is its oxide CMP product line. Another reason of the cuts is the weakness in the equipment sector. In its annual report Nova said it expects wafer fab equipment annual spending to decline by 15 percent in 2008, relative to 2007.

Source: Amir Ben-Artzi. Weak dollar drives Nova to cut staff by 6%. EE Times Europe (3 April 2008) [FullText]