RealTime IT News

Slumping Revenues Prompt Layoffs at Ciena

Hobbled by disappointing first quarter results and anticipating flat revenue in the second quarter, optical networking equipment maker Ciena Corp. is laying off approximately 400 employees and closing its Marlborough, Mass., research and development facility. The company expects to record a restructuring charge of between $9-$11 million in its second quarter associated with the 12 percent workforce reduction.

Affected employees will be paid through April 5 and will be eligible for additional severance packages. They also will receive outplacement assistance and training.

The Linthicum, Md.-based Ciena also announced first quarter revenue of $160 million and a Q1 net loss of 21-24 cents a share. The news comes after a fourth quarter loss of almost $2 billion. In November, Ciena cut its workforce by 10 percent, laying off 380 employees and took a $5-$6 million restructuring charge. The workforce reduction was concentrated in its manufacturing operations.

"Our first quarter revenues were lower than expected because during the quarter, several of our major customers made substantial changes in their deployment plans resulting in significant reductions in the amounts of equipment they had previously indicated they anticipated purchasing from us," said Gary Smith, president and chief executive officer of Ciena. "Historically, our first fiscal quarter has benefited from the start of the new calendar year and the corresponding renewal of service providers' capital expense budgets. However, even now, a month into the new calendar year, our customers' capital budgets and deployment plans for 2002 remain uncertain."

Smith added that Ciena's customers have given the company little reason to believe revenue will improve in the second quarter. "We're faced with a challenging and uncertain market, but based on our ongoing discussions with our customers, we believe our fiscal second quarter revenue could be flat to down from our fiscal first quarter revenue."

Smith said the telecom industry was "a cyclical one" and that "our customers will resume investing in their networks."