Jan. 27--Roughly two-thirds of the 1,800 layoffs that Texas Instruments Inc. announced Monday afternoon will come in North Texas, where the company employs about 11,000 people.

And nearly all of those 1,200 cuts will come before the end of March.

The layoffs, combined with 1,600 buyouts, will reduce TI's overall head count by 12 percent and save the Dallas-based company $500 million a year.

TI says such cuts are necessary, given a worldwide recession that has sapped demand for its chips and led the company to report sharply lower fourth-quarter earnings.

The sagging economy, along with one-time charges, pushed fourth-quarter profit down 86 percent to $107 million, or 8 cents a share.

Without the restructuring charges, earnings would have been 21 cents a share on sales of $2.49 billion.

Shares of TI stock jumped 5.6 percent in trading that followed the after-hours announcement, mostly because the numbers were less dire than many observers had predicted. Analysts surveyed by Thomson Reuters had expected, on average, that TI would earn 12 cents a share on revenue of $2.4 billion.

Still, a quick comparison with TI's performance in fourth quarter 2007 shows just how much the economy has hurt the company's business. Sales fell 30 percent -- and fell in every product category.

"Given this economic environment, the shortfall wasn't overly surprising," said Bill Kreher, an analyst at Edward Jones.

"The job cuts, while terrible for the affected employees, are probably necessary for the health of the company going forward."

Even before Monday's announcement, TI had implemented a number of cost-cutting measures: a near-total hiring freeze, inventory reductions, temporary factory shutdowns and a voluntary retirement plan, which will account for most of the buyouts.

But those measures were not enough, the company said Monday, when it announced and explained the layoffs.

"Most of the reductions will come in our internal support functions and noncore product lines so that a greater percentage of the dollars we spend will go directly toward developing and supporting analog and embedded processing products," chief executive Rich Templeton said in the earnings release.

"We are not counting on a near-term economic rebound for improvement. The actions we are taking to reduce expenses and inventory will position TI to deliver solid financial results, even in a period of prolonged economic weakness."

Looking forward, TI says it could lose as much as 11 cents a share or make as much as 3 cents a share this quarter on sales between $1.62 billion and $2.12 billion.

And those numbers will also be affected by restructuring costs.

Charges for the 12 percent employment reductions, which will be complete by the end of the third quarter, will be about $300 million.

Annual savings from those cuts -- and those already announced in the company's wireless business -- will be about $700 million.

Those savings should help TI weather the downturn without damaging the company's long-term growth prospects.

"We are working hard to control our costs and prevent posting a loss this quarter," said Kevin March, the company's chief financial officer, "but not at the expense of future performance."

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