Ciena Cutting 22 Pct. of Work Force
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LINTHICUM, Md. (AP) _ Ciena Corp. is cutting about 650 jobs, or 22 percent of its work force, because of the slowdown in the telecommunications industry, the optical networking company said Tuesday.
The trims follow a reduction of about 400 jobs announced in February, which also were blamed on the telecom downturn.
The company said the latest job cuts would save about $150 million a year but would result in a second-quarter charge of between $125 million and $135 million. Ciena also said it would take a second-quarter charge of between $200 million and $225 million for excess inventory of long-haul transport products and purchase commitments from suppliers.
Ciena shares rose 5 cents to close at $8.40 in trading Tuesday on the Nasdaq Stock Market.
Employees will be paid through May 24 and will be eligible for additional severance packages. They will also receive placement assistance and training.
Ciena said the job cuts are due in part to reduced spending in the telecommunications-equipment market.
``The telecom-equipment market has changed dramatically in the last year and we have to adjust to those changes if we are to maintain our leadership position in the industry,″ said Gary Smith, Ciena’s president and CEO.
Ciena reported a $70.6 million first-quarter loss in February and warned that revenues would continue to fall because of spending cutbacks by its biggest customers.
Smith said in February that two of the company’s biggest customers had informed Ciena that they would purchase ``significantly less from us than they had previously indicated.″ Ciena did not identify the customers.
Joe Gladue, a financial analyst with The Chapman Co., said Ciena is one of a number of companies in the industry cutting back its work force due inflated expectations of the market.
``All of the companies in this sector have had previous rounds of layoffs,″ Gladue said. ``The demand isn’t growing as fast as every one expected, so revenues aren’t growing.″