Optical networking systems developer Ciena Corp.
is initiating an immediate workforce reduction of 380 employees. The overall 10 percent reduction in employees will be concentrated in its manufacturing operations. Affected employees will be paid through Jan. 10 and will be eligible for additional severance packages.
The Linthicum, Md.-based Ciena indicated that the restructuring charge of between $5-$6 million associated with the workforce reduction action would be recorded in its first fiscal quarter 2002.
“The decision to reduce our manufacturing operations was a difficult, but necessary one,” said Gary Smith, Ciena’s president and chief executive officer. “As a result of our continued efforts to improve manufacturing efficiencies, the greater availability of cost-effective optical manufacturing outsourcing options, and our customers’ changing spending patterns, we no longer required as much in-house manufacturing capacity to keep up with our customers’ demand.”
The company also announced that it will consolidate certain facilities related to business activities that are being restructured. As a result, the Ciena expects to record a restructuring charge of approximately $15 to $16 million in its fourth fiscal quarter of 2001, relating to lease terminations and non-cancelable lease costs and the write-down of certain property, equipment and leasehold improvements.
Ciena anticipates revenue of $367.8 million for its fourth fiscal quarter, representing an increase of approximately 27 percent as compared to the same period a year ago when the company reported revenue of $287.6 million. The company expects an EBITDA earnings per share of 4-6 cents. Analysts have pegged the earnings at 4 cents.
Based on the amount by which the carrying amount of certain assets exceed their current fair value, the company expects to record a charge of approximately $1.7 billion to reduce goodwill during the fourth quarter of fiscal 2001.
“Because of Ciena’s exclusive focus on next-generation optical networking equipment and our diverse and growing customer base, we continue to believe that we are better positioned than most to navigate our business through these turbulent times for the telecom equipment industry,” said Smith. “We believe that it is critical, now more than ever, to continue to invest in our business; in technology and product development and in broadening our sales channels.”